Union budget 2009-10

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Union budget 2009-10

  1. 1. www.finerva.com | support@finerva.com | +91-9787-11-11-66 Citizens’ View of Union Budget 2009-10 Union Budget 2009-10
  2. 2. www.finerva.com | support@finerva.com | +91-9787-11-11-66 Citizens’ View of Union Budget 2009-10 The “Budget” simplified J.Karthikeyan Director – Research & Consulting Finerva Financial Solutions Pvt Ltd
  3. 3. www.finerva.com | support@finerva.com | +91-9787-11-11-66 Citizens’ View of Union Budget 2009-10 The Menu! • Jargon, De-Jargonised • Fiscal Policy • Key Features of Budget 2009-10 • Effects on the Indian Economy: A Perspective
  4. 4. www.finerva.com | support@finerva.com | +91-9787-11-11-66 Citizens’ View of Union Budget 2009-10 • The budget of a government is a summary or plan of the intended revenues and expenditures of that government. • Annual report of the Government’s performance
  5. 5. www.finerva.com | support@finerva.com | +91-9787-11-11-66 Citizens’ View of Union Budget 2009-10 Components of Budget • Revenue receipts • Capital receipts • Revenue expenditure • Capital expenditure
  6. 6. www.finerva.com | support@finerva.com | +91-9787-11-11-66 Citizens’ View of Union Budget 2009-10 Revenue Receipts • Receipts: From taxes and other sources • Taxes: Income tax, Corporate Tax, Indirect taxes etc • Interest on lending, dividends from PSU’s, fees etc
  7. 7. www.finerva.com | support@finerva.com | +91-9787-11-11-66 Citizens’ View of Union Budget 2009-10 Revenue Expenditure • Day to day running of the government • “anything that does not result in creation of assets.
  8. 8. www.finerva.com | support@finerva.com | +91-9787-11-11-66 Citizens’ View of Union Budget 2009-10 Capital Budget • Capital receipts: Loans, T-bills, Divestment income, Provident Fund • Capital Expenses: On assets. Land, Machinery, Loans to states
  9. 9. www.finerva.com | support@finerva.com | +91-9787-11-11-66 Citizens’ View of Union Budget 2009-10 Taxes
  10. 10. www.finerva.com | support@finerva.com | +91-9787-11-11-66 Citizens’ View of Union Budget 2009-10 Taxes Meaning : Non quid pro quo transfer of private income to public coffers by means of taxes. 1. Direct taxes- Corporate tax, Div. Distribution Tax, Personal Income Tax, Fringe Benefit taxes, Banking Cash Transaction Tax 2. Indirect taxes- Central Sales Tax, Customs, Service Tax, excise duty
  11. 11. www.finerva.com | support@finerva.com | +91-9787-11-11-66 Citizens’ View of Union Budget 2009-10 Plan and Non Plan • Plan: Discussion between Ministries and Planning Commission • Non-Plan: Comes from Interest payments, subsidies, salaries, social services, defense spending ,etc.,
  12. 12. www.finerva.com | support@finerva.com | +91-9787-11-11-66 Citizens’ View of Union Budget 2009-10 Fiscal Policy-Meaning The word fisc means ‘state treasury’ and fiscal policy Refers to policy concerning the use of ‘state treasury’ or the govt. finances to achieve the macroeconomic goals. “any decision to change the level, composition or timing of govt. expenditure or to vary the burden ,the structure or frequency of the tax payment is fiscal policy.” G.K. Shaw
  13. 13. www.finerva.com | support@finerva.com | +91-9787-11-11-66 Citizens’ View of Union Budget 2009-10 Fiscal Policy And Macroeconomic Goals • Economic Growth: By creating conditions for increase in savings & investment. • Employment: By encouraging the use of labour-absorbing technology
  14. 14. www.finerva.com | support@finerva.com | +91-9787-11-11-66 Citizens’ View of Union Budget 2009-10 Contd.. • Stabilization: fight with depressionary trends and booming (overheating) indications in the economy • Economic Equality: By reducing the income and wealth gaps between the rich and poor. • Price stability: employed to contain inflationary and deflationary tendencies in the economy.
  15. 15. www.finerva.com | support@finerva.com | +91-9787-11-11-66 Citizens’ View of Union Budget 2009-10 Budgetary surplus and deficit • “A budget is a detailed plan of operations for some specific future period” • Keeping budget balanced (R=E) or deficit (R<E) or surplus (R>E) as a matter of policy is itself a fiscal instrument.
  16. 16. www.finerva.com | support@finerva.com | +91-9787-11-11-66 Citizens’ View of Union Budget 2009-10 Numbers 2009-10 • Fiscal deficit 6.5% of GDP • Expenditure: Rs 10 Lakh Crore • Plan Expenditure- up by 34% • Non Plan Outlay- up by 37 % • Tax receipts: 6.41 lakh crore • Fiscal Deficit – 35.9% of the expenditure.
  17. 17. www.finerva.com | support@finerva.com | +91-9787-11-11-66 Citizens’ View of Union Budget 2009-10 Effects on the Economy • Interest rates • PSU Disinvestment • Debt • Industry
  18. 18. www.finerva.com | support@finerva.com | +91-9787-11-11-66 Citizens’ View of Union Budget 2009-10 Industry wise affects
  19. 19. www.finerva.com | support@finerva.com | +91-9787-11-11-66 Citizens’ View of Union Budget 2009-10 Citizens’ Angle on Budget 2009- 10
  20. 20. www.finerva.com | support@finerva.com | +91-9787-11-11-66 Citizens’ View of Union Budget 2009-10 Personal Finance Today • Predominantly Tax Planning • Investment in Section 80C Instruments and taking a Housing Loan • Goal Based Planning hardly heard of • Budget awaited for tax benefits
  21. 21. www.finerva.com | support@finerva.com | +91-9787-11-11-66 Citizens’ View of Union Budget 2009-10 Personal Finance - Scope •Goal Term –Long Term –Short Term –Mid Term
  22. 22. www.finerva.com | support@finerva.com | +91-9787-11-11-66 Citizens’ View of Union Budget 2009-10 Contd.. • Cash Flow –Investment –Debt –Income Tax –Asset Management –Pension –Estate Planning
  23. 23. www.finerva.com | support@finerva.com | +91-9787-11-11-66 Citizens’ View of Union Budget 2009-10 Budget Angle for Students • Student Loans Interest get tax benefit under Section 80E for all types of higher education.
  24. 24. www.finerva.com | support@finerva.com | +91-9787-11-11-66 Citizens’ View of Union Budget 2009-10 Budget Angle for Salaried Class • Marginal Benefit from Higher Slab for Taxation – Rs.10,000 increase in Base Slab (Rs.15,000 for senior citizens > 65 years of age) • Benefit to those earning >Rs.10 lakhs from surcharge removal • New Pension Scheme to remain in the EET regime. But tax benefits on its income and transactions are a plus.
  25. 25. www.finerva.com | support@finerva.com | +91-9787-11-11-66 Citizens’ View of Union Budget 2009-10 Budget Angle for Salaried Class • Wealth Tax limit raised to Rs.30 lakhs from Rs.15 lakhs • Section 80C Instruments remain unchanged – ULIPs and ELSS for the youth most beneficial – Stay away from Housing Loan for tax benefit purpose; as it creates negative cash flow. • Retired Defence personnel get benefits under One Rank One Pension Scheme.
  26. 26. www.finerva.com | support@finerva.com | +91-9787-11-11-66 Citizens’ View of Union Budget 2009-10 Budget Angle for Salaried Class • Fringe Benefit Tax removed. Better and Meaningful perks can be expected.
  27. 27. www.finerva.com | support@finerva.com | +91-9787-11-11-66 Citizens’ View of Union Budget 2009-10 Budget Angle for Small Business & Entrepreneurs • Presumptive Tax Scheme for turnover <Rs.40 lakhs. – Income @8% – Exempt from maintaining books of accounts – Tax Pay-Out only at the time of Tax Returns Filing
  28. 28. www.finerva.com | support@finerva.com | +91-9787-11-11-66 Citizens’ View of Union Budget 2009-10 The Take Aways • Budget alone should not influence Personal Finance Decisions • Goal Based Planning and Implementation required • Maximise Benefits from Tax Breaks; But don’t Break Yourselves Doing It • Wealth Creation ≠ Tax Planning
  29. 29. www.finerva.com | support@finerva.com | +91-9787-11-11-66 Citizens’ View of Union Budget 2009-10

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