How Budget 2005 Impacts You

Earning

• Tax slabs recalibrated

• Lower tax for all income levels

• Higher exemption limits for women (Rs 1.25 lakh) and senior citizens (Rs 1.5 lakh)

• Women, senior citizens gain

• Sec 88 & 80L abolished; the new Sec 80C allows blanket deductions up to Rs 1 lakh

• Everyone gains; but people with taxable incomes over Rs 5 lakh gain more

• New fringe benefits tax on employers targets cash reimbursements and soft perks

• Salary structures to become cleaner

• New bill to set up pension regulator

• Growth-oriented pension investments in future

Investing

• Corporate taxes down 36.6% to 33.6%; surcharge up from 2.5% to 10%

• Higher profitability should drive share prices

• Depreciation rates down from 25% to 15%

• Capital-intensive manufacturers to take a hit

• STT up on all transactions

• Marginal increase in transaction costs

• Corporate bonds market to be revived; gold exchange traded funds (ETFs) to be launched

• Options for investors to diversify portfolios

Spending

• Service tax on builders…

• Apartment prices likely to go up

• …but deductions on home loans stay

• Dream home lure to endure

• Clubs, recruitment firms in service tax net

• Higher outgo for you

• Higher excise on cigarettes, pan masala, gutka, imported liquor

• You'll pay more

• Import duty on plasma TVs, hi-fi audio, DVD players, mobile phone, PC components down

• You'll pay less

• Cash transaction tax of 0.1% on all cash withdrawals of Rs 10,000/day

• Other modes of fund transfer (ECS, cards etc) will be preferred