Understanding What Budget 2015 Holds For Us

From encouraging us to plan for health emergencies to making your gold purchases useful, Budget 2015 tells us to save and invest more thoughtfully.

From encouraging us to plan for health emergencies and retirement, to making your gold purchases useful, Budget 2015 tells us to save and invest more thoughtfully. 

As our Finance Minister decided to give an account of the government’s saving and spending over a weekend, your Great Gruhini, instead of trying out a new recipe in her kitchen, instead decided to put together for you a summary of what Mr. Jaitley has announced for us.

So here is a quick summary of what this budget holds for you.

These changes will be assessed in the financial year starting April 1, 2016. This means you can make changes in your earnings/spending from April 1 2015 till March 31, 2016.

How Budget 2015 impacts your earnings

1.Your gross salary comes down by Rs. 9,600 (in an year): This is on account of an increase in transport allowance from Rs.800 per month to Rs.1600 per month.

Pre Budget 2015: If your company pays you an allowance of Rs.2000 a month, Rs.800 of this was exempt and Rs.1200 was added to your salary for tax calculation.

After Budget 2015: Rs.1600 per month will be exempt and only Rs.400 a month will be added to your salary.

2. Hike in deductions can reduce your taxable income: Now you can claim Rs.10,000 more towards premium paid for your health insurance policy. Your parents, if above 60 years, can claim a higher deduction too.

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Pre Budget 2015: You could claim upto Rs.15,000 for health insurance premium. For senior citizens, this limit was Rs 20,000

After Budget 2015Now you can claim upto Rs.25000 for health insurance premium and senior citizens can claim upto Rs.30,000. A new deduction has been introduced for super senior citizens (above 80 years), who don’t have a health insurance policy in their name and they can claim medical expenses upto Rs.30,000. Under two separate sections, the deductions for medical treatment has also been enhanced.

3. Flexibility to choose your salary contribution

Pre Budget 2015: Most of us who are working contribute to Employee provident fund (EPF) which is in turn matched by our employer’s contribution too.

After Budget 2015In some time you will be able to choose whether you want to contribute to the National Pension Scheme (NPS) or EPF

4. Donations to include Swachh Bharat and Clean Ganga Fund: Apart from charity, if you donate money for Swachh Bharat Kosh and Clean Ganga Fund, you will get 100% deduction for the amount contributed as per section 80G of the Income tax act.

How Budget 2015 impacts your savings

1. More incentives to save for retirement

Pre Budget 2015: If you invested in any pension schemes of insurance or mutual funds or National Pension Scheme (NPS) you could only get a rebate of Rs.1 lakh, as against Rs 1.5 lakh limit for other tax saving options like public provident fund (PPF) or tax saving funds.

After Budget 2015: Now alongside PPF, and other tax saving options, pension schemes of insurance or mutual funds will also qualify for total deduction of Rs. 1.5 lakh. In addition to this, if you invest in the government’s National Pension Scheme (NPS), you get an additional Rs.50,000 deduction over and above Rs.1.5 lakh.

2. New ways to invest in gold: I know my Gruhinis get carried away or lured in by jewellers towards their deposit schemes for gold. Now, the government can help you show your love for gold in mainly three ways:

  • Gold monetization scheme: A deposit scheme whereby you can deposit gold and earn interest on it just like a fixed deposit.
  • Gold Bond Fund: A new way to invest in gold like a bond that earns interest.
  • Made in India Gold Coins: Introduction of Gold coins with Ashoka Chakras so that we don’t rush for imported gold coins.

Watch this space for more clarity on these schemes.

How Budget 2015 impacts your spending

1. Pay more for Services: You get more incentives to take your kids to park instead of bowling alleys. Besides this, the service tax rate goes up by 12.36% to 14%.

Pre Budget 2015: Services such as dining out, theatres, gym memberships were charged at 12.36%. Services such as amusement parks, bowling alleys entertainment shows were exempt from service tax

After Budget 2015: We pay more for virtually all the services such as eating out, gym etc. Services of amusement parks and theme parks too will attract service tax. Services such as visits to wildlife sanctuaries, tiger reserves, museums and zoos will be exempt from service tax.

2. Permanent Account Number (PAN) for everything: You need to give your PAN card number for almost every transaction including property and jewellery purchase of more than Rs 1 lakh.

What about this budget has impressed you? Is there anything that you’re not happy about? Share!

This post was originally published at the author’s blog.

Budget concept image via Shutterstock


About the Author


Rachna Monga Koppikar aka The Great Gruhini is a finance writer who’s worked with India’s leading publications for well over a decade. Having swam and mastered the treacherous waters of corporate and personal read more...

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