10 things on how the budget impacts you - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

10 things on how the budget impacts you

Feb 28, 2002

  • Personal taxes: Personal tax slabs remain same, but Sec-88 benefits for individuals earning above Rs 500,000 go. For individuals earning between Rs 150,000 to Rs 500,000, the benefit is halved from 20% deduction to 10%. Though 2% earthquake surcharge was removed, a new 5% security surcharge has been added. Net, net salaried class shell out more taxes. So government mops up more tax, thereby trying to reduce its deficit. Come to think of it, what happened to the government’s own expenditure cutting drive?
  • Interest rates: Cut in most administered interest rates by 0.5% (by 50 basis points) from March 1, 2002. Administered interest rates will now be benchmarked to the average annual yields of government securities of equivalent maturities in the secondary market (to be reset once a year). RBI Relief Bonds will pay an interest rate of 8% from March 1, 2002. What’s more, one cannot invest more than Rs 200,000 in these bonds. So, deposit rates will fall, thus affecting individuals and retired personnel who have savings in NSCs, PPFs and other fixed income instruments henceforth.

  • Equity investments: Even equity market investments were not spared. From now on, dividend will be taxed in the hands of the recipient. That too, not at 10%, but at the individual’s tax bracket rate. These guidelines are also applicable for mutual fund dividends. Bottomline, 2002-03 is going to leave a big hole in one’s pocket and earning a decent return is not going to be easy. All the aforesaid measures may give a boost to housing development, as housing loan benefits will look attractive to individuals.

  • Excise duties: Excise duties were largely left unchanged. Only for tea excise was halved from Rs 2 per Kg to Re 1 per Kg. Excise duty on petrol was slashed from 90% to 32%. But the FM has given from one hand, and taken from the other. He put an additional Rs 6 per litre surcharge on petrol, largely negating the benefit. Apart from this the rationalisation of the duty structure continues.

  • Custom duties: The peak rate of custom duties was reduced from 35% to 30%. The domestic tea industry was doubly blessed in this year’s budget. Not only excise was halved, the government also doubled import duties on both tea and coffee to 100%. For pulses, peak customs duties were hiked to 80%.

  • Dismantling of APM post April 1, 2002: Means market determined rate for petroleum products. The immediate result is that diesel becomes cheaper by Rs 0.5 and petrol by Re 1. Signs of subsidies going. Kerosene subsidies cut to 1/3rd of previous level, to become costlier going forward. Housewives have to shell out an additional Rs 40 per cylinder of LPG.

  • Effect on Rural India: Upped plan outlay for rural road development and electrification. This is also likely to encourage private investments in setting up distribution and supply chains even in the rural hinterland. Penetration levels of consumer product companies are going to rise, thereby aiding volume growth. Also fertilizer de-control is on the cards. Fertiliser issue price has been raised by 5%. But all this is a long term process. But atleast a beginning has been made.

  • Power: The government focus has made a transition from generation to transmission & distribution. Accelerated Power Development and Reform Program (APDRP) will have an enhanced outlay of Rs 35 bn (up from Rs 15 bn). Agreement signed with states for corporatising SEBs and time bound rehabilitation of the SEBs recovery

  • Infrastructure focus: The government’s infrastructure development drive continues. Focus given to roads, power, telecom, hotels, airports and railways. The only grey area is the implementation of these plans.

  • Bottomline: Individuals have to chew a bitter pill. The industry will probably be satisfied as the cost of capital comes down and tax on distributed profit is done away with.

Equitymaster requests your view! Post a comment on "10 things on how the budget impacts you ". Click here!

  

More Views on News

These Stocks Have Rallied Over 300% In the Last 12 Months. Is the Rally Justified? (Views On News)

Nov 12, 2021

As many as 150 stocks from the BSE 500 index deliver multibagger returns in the past one year.

Ultimate Guide to Hedging Your Portfolio (Fast Profits Daily)

Sep 21, 2021

How can you protect your portfolio in a market crash? Find out in this video.

Ride the Indian Real Estate Revival with this 'Different' Smallcap Stock (Profit Hunter)

Mar 23, 2021

Affordability in the housing segment has never been so good in last one and a half decade. Here's how you could make the most of it...

My Latest Stock Recommendation (Fast Profits Daily)

Oct 9, 2020

How I picked an exciting stock using trends from both the commodity and equity markets.

Data is the New Oil but It's Also the New Sugar. Here's How to Fight it (Profit Hunter)

Jun 1, 2020

Is too much data hurting your quest for market beating returns?

More Views on News

Most Popular

Infosys vs TCS: Which is Better? (Views On News)

Nov 26, 2021

In the post pandemic era, the top two IT companies in India are fighting to capture the growing demand for IT.

This Multibagger Stock Zooms 20% After Dolly Khanna Buys Stake (Views On News)

Nov 24, 2021

Shares of this edible oil company zoomed over 50% in three days after ace investor bought around 1% stake.

6 Popular Stocks that Turned into Penny Stocks (Views On News)

Nov 27, 2021

A look at popular stocks that crashed big time and never recovered, i.e. which went from 'Multibaggers to Multibeggers'.

MobiKwik IPO Opens for Subscription Soon. Key Things to Know Before Subscribing. (Views On News)

Nov 20, 2021

The Rs 19 bn issue is set to hit the market soon.

5 Indian Companies Embracing Blockchain Technology (Views On News)

Nov 23, 2021

Blockchain adoption in India was slow in the past. Now, the technology is being well received.

More

Become A Smarter Investor
In Just 5 Minutes

Multibagger Stock Guide 2022
Get our special report Multibagger Stocks Guide (2022 Edition) Now!
We will never sell or rent your email id.
Please read our Terms

MARKET STATS