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Union Budget 2009-10
The “Budget” simplified J.Karthikeyan Director – Research & Consulting Finerva Financial Solutions Pvt Ltd
The Menu! ,[object Object]
Fiscal Policy
Key Features of Budget 2009-10
Effects on the Indian Economy: A Perspective,[object Object]
Annual report of the Government’s performance,[object Object]
Capital receipts
Revenue expenditure
Capital expenditure,[object Object]
Taxes: Income tax, Corporate Tax, Indirect taxes etc
Interest on lending, dividends from PSU’s, fees etc,[object Object]
“anything that does not result in creation of assets.,[object Object]
Taxes
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
Plan and Non Plan Plan: Discussion between Ministries and Planning Commission Non-Plan: Comes from Interest payments, subsidies, salaries, social services, defense spending ,etc.,
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
Fiscal Policy And Macroeconomic Goals Economic Growth: By creating conditions for increase in savings & investment. Employment: By encouraging the use of labour-absorbing technology
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.
Budgetary surplus and deficit ,[object Object]
Keeping budget balanced (R=E) or deficit (R<E) or surplus (R>E) as a matter of policy is itself a fiscal instrument.,[object Object]
Effects on the Economy Interest rates PSU Disinvestment Debt Industry
Industry wise affects
Citizens’ Angle on 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
Personal Finance - Scope Goal Term  Long Term Short Term Mid Term
Contd.. Cash Flow Investment Debt Income Tax Asset Management Pension Estate Planning
Budget Angle for Students Student Loans Interest get tax benefit under Section 80E for all types of higher education.
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.

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Union budget 2009-10

  • 2. The “Budget” simplified J.Karthikeyan Director – Research & Consulting Finerva Financial Solutions Pvt Ltd
  • 3.
  • 5. Key Features of Budget 2009-10
  • 6.
  • 7.
  • 10.
  • 11. Taxes: Income tax, Corporate Tax, Indirect taxes etc
  • 12.
  • 13.
  • 14. Taxes
  • 15. 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
  • 16. Plan and Non Plan Plan: Discussion between Ministries and Planning Commission Non-Plan: Comes from Interest payments, subsidies, salaries, social services, defense spending ,etc.,
  • 17. 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
  • 18. Fiscal Policy And Macroeconomic Goals Economic Growth: By creating conditions for increase in savings & investment. Employment: By encouraging the use of labour-absorbing technology
  • 19. 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.
  • 20.
  • 21.
  • 22. Effects on the Economy Interest rates PSU Disinvestment Debt Industry
  • 24. Citizens’ Angle on Budget 2009-10
  • 25. 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
  • 26. Personal Finance - Scope Goal Term Long Term Short Term Mid Term
  • 27. Contd.. Cash Flow Investment Debt Income Tax Asset Management Pension Estate Planning
  • 28. Budget Angle for Students Student Loans Interest get tax benefit under Section 80E for all types of higher education.
  • 29. 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.
  • 30. 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.
  • 31. Budget Angle for Salaried Class Fringe Benefit Tax removed. Better and Meaningful perks can be expected.
  • 32. 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
  • 33. 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