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Election Budget

This is an election budget and it's giveaways-both in terms of fresh expenditures as well as revenue foregone are done with an eye on votes. Surely expected in a democracy.

We want to highlight two features that have a positive effect on savings and great for the people. 1. 3 crore people don't have to pay taxes - The increase in Section 87b tax rebate has meant that with some tax planning, we doubt anyone with a salary of around Rs. 65K a month would pay any income tax at all. There is a much stronger incentive to make tax saving investments. What is also very interesting is that the benefit is limited to those in the first tax bracket alone!

2. Extension of Sec 54 Capital Gains exemption - Many of our customers and others we know need to exchange one older (or larger) house for two smaller or newer ones. Up till now, capital gains exemption would be available on only the proportion of the proceeds that go into one of those. It's encouraging to see these kinds of nuts-and-bolts fine-tuning in the tax laws that result in more money in the pockets of savers.

It would have been great to have capital gains tax on equity investments rolled back but it is entirely understandable that this isn't possible in an election year.

A great summary is available here.

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