Shankar.Raghuraman@timesgroup.

com
F
inance minister Arun Jaitley started his
maiden Budget speech noting that the
people of India have decisively voted for
a change and that the poll verdict was a sign
of their exasperation with the status quo.
That appeared to be a signal that he would ar-
ticulate a radically new vision. But he then
spent the next two hours and a bit one of the
longest Budget speeches ever presenting a
Budget that was in its larger vision almost in-
distinguishable from the offerings of the UPA
over the past 10 years.
The Budget also showed quite clearly that
the Modi government prefers a something-
for-everyone kind of approach, at least for
the moment, with crucial state elections com-
ing up, and will not be in a hurry to com-
pletely distance itself from the welfarist
stance of the UPA regime.
It will, however, try and signal a shift,
even where UPA schemes are continued. For
instance, while the job creation scheme MN-
REGA is to stay, work under it will now be
targeted at asset creation in rural areas.
One clear policy indicator was in the area
of foreign direct investment. FDI up to 49%
will be allowed in defence manufacturing
and insurance, subject to approval by the
Foreign Investment Promotion Board (FIPB),
and with full Indian management and con-
trol. FDI entry into construction was also
eased with the floor on built-up area for
projects that can qualify for foreign invest-
ment being lowered.
Another palpable sign of regime change
was in the nomenclature of various govern-
ment schemes the Gandhi-Nehru tags have
given way to Hindu nationalists Deendayal
Upadhyaya, Syama Prasad Mookerjee and
Madan Mohan Malaviya.
The attempt to glorify these Hindu nation-
alists, seen together with the announcement
of a package for Kashmiri Pandits, boost to
religious tourism and the rail link to Char
Dham announced earlier in the railway
budget, indicates an effort to enlarge the
BJPs Hindu constituency.
5 injured in Pune explosion
A low-intensity blast set off by a bomb on a
bike parked in front of a police station near
Dagdusheth temple in Pune left five injured
on Thursday. Police suspect IMs hand | P 19
Zohra Sehgal, 102, the
grand old diva of Indias
performing arts, died in New
Delhi on Thursday. Her career
spanned over 70 years | P 19
Hands and ngers of forgers should be
chopped off, says Tamil Nadu HC judge | P 19
Iraqi militants seize 40kg uranium, Baghdad
fears it may be used to make WMDs | P 22
Heavy workload has reduced SC to a court
of appeal, says CJI, seeks solution | P 19
Bhuvneshwar (58), Shami (51*) take India
to 457; England 43/1 at stumps on Day 2 | P 26
BEYOND THE BUDGET
MOVIE REVIEWS TURN TO P 18
FOR TAXPAYERS
SMOOTH | I-T
exemption limit up
from 2L to 2.5L,
top bracket saves
5,665 in tax
Exemption
limit for those
aged above 60
but below 80 also
increased from 2.5 lakh to 3 lakh
Deduction limit under Section 80C up
from 1L to 1.5L, resulting in a maximum
possible tax saving of 16,995 a year
Deduction limit on interest for home loan
increased from 1.5L to 2L, resulting in
maximum tax saving of 16,995
ROUGH | 3% education cess to continue
10% surcharge continues for individuals
with income over 1 crore
FOR CONSUMERS
SMOOTH | Free
baggage allowance
increased from
35,000 to 45,000
Customs duty on
inputs for durables
like PCs, TVs and
LED lights reduced
Excise duty on
footwear priced at 500- 1,000 halved to 6%
ROUGH| Cut & polished diamonds, coloured
gemstones to attract 2% customs duty
Radio taxis brought under service tax net
Excise duty on cigarettes, cigars, cheroots
and cigarillos increased by 11%-72%; excise
duty on pan masala raised from 12% to 16%
Prices of zzy drinks, avoured water,
juices & energy drinks to increase by 5%
FOR BUSINESSMEN
SMOOTH | Realty
investment trusts,
infrastructure
investment trusts
to get pass-through
status for tax
purposes to avoid
double tax
Sunset clause
for power units extended till March 2017
ROUGH| Retrospective amendment on
indirect transfer of shares retained,
high-level panel to look at any fresh cases
TEAMTOI
F
or those who were expecting a tough, non-
populist Budget, the surprise couldnt
have been more pleasant. In one shot,
finance minister Arun Jaitley raised the
income tax exemption limit by Rs 50,000
for all taxpayers below 80 years of age,
allowed an extra Rs 50,000 for tax-saving
investments like provident fund and insurance and
for good measure gave you a tax write-off on an extra
Rs 50,000 for interest payments on home loans. Pre-
Budget speculation was that he would do one or two
of the above; he did a hat-trick. Taken together, the
annual tax savings from these three changes
could go up to nearly Rs 39,000 for those in the
top income bracket. Even for those in the 10% tax
slab, the savings are a not-insignificant Rs 15,665.
Heres how you can maximize your gains:
The basic exemption limit is to be increased from
Rs 2 lakh to Rs 2.5 lakh and for senior citizens from
Rs 2.5 lakh to Rs 3 lakh. The existing education cess
of 3% and the surcharge of 10% for annual incomes
of Rs 1 crore or more continue. The change in the
exemption limit means
that irrespective of
whether you are in the
10%, 20% or 30% income
tax slab, you save Rs
5,150 in taxes. If your
income is a crore or
more, you save Rs 5,665.
Theres a catch, though.
For those aged 80 or
more, the change in the
exemption limit is irrelevant, since they are anyway
eligible for a limit of Rs 5 lakh.
The maximum deduction under Section 80C,
which covers investment options like provident fund,
public provident fund (PPF), insurance policies and
equity-linked savings schemes, is to increase from
Rs 1 lakh to Rs 1.5 lakh. Since this means you can
deduct an extra Rs 50,000 from your taxable income,
the tax savings could go as high as Rs 16,995 depend-
ing on which tax slab you are in. Even at the lowest
tax slab, this change will save you Rs 5,150 a year.
The icing on the cake is that all of the Rs 1.5 lakh
can be invested in PPF, which has been giving tax-free
returns of about 8.5-9%. Thats equivalent to a return
of over 12% from an instrument whose returns are
taxed like fixed deposits, the other option much fa-
voured by risk-averse middle-class investors.
The maximum deduction for payment of interest
on home loans for self-occupied property is to go up
from Rs 1.5 lakh to Rs 2 lakh. As in the case of Sec 80C,
this will allow you to knock off Rs 50,000 from your
taxable income and hence result in cutting your tax
liability by anywhere between Rs 5,150 and Rs 16,995.
A couple of caveats need to be kept in mind. First,
you must acquire or construct the property for which
the loan has been taken within three years from the
end of the financial year in which it was taken. Sec-
ond, this provision really helps only in the early
years of the repayment of home loans, since that is
when the interest component tends to be high.
While it would seem that you will have to start
paying tax the moment your income crosses Rs 2.5
lakh, in fact, it is theoretically possible to pay zero
tax right up to an income of Rs 9.30 lakh. A very
senior citizen (defined as someone above 80 years)
doesnt pay any tax till Rs 5 lakh. If he or she were
to take a home loan (that may seem improbable but
can be done against collateral) for say Rs 90 lakh,
there would be a tax saving on interest payment of
up to Rs 2 lakh. Throw in the Rs 1.5 lakh exemption
limit under Sec 80C, deduction of Rs 20,000 on med-
ical insurance premium, and another Rs 60,000 on
specified medical expenses and you get a neat tax-free
sum thats over four times the apparent exemption
limit. For those aged between 60 and 80, the corre-
sponding figure would be Rs 7.10 lakh and for those
aged below 60, it would be Rs 6.40 lakh (as the medi-
cal expenses limit is lower at Rs 40,000). Admittedly,
some of these examples may seem a little stretched
but they do serve to illustrate how misleading the
official exemption limit is.
INSIDE THE BUDGET
What does this Budget mean for you and
your family? What were the political pressures
that shaped it? And how will it impact your
finances as well as the nations fortunes?
This special edition analyses the impact and
implications of the Budget from every
possible angle | Pages 2-17, 21
View From The Top: Kumar Birla, Deepak
Parekh, Sunil Mittal, Saumitra Chaudhuri
FM MAKES MONEY
FOR YOU
PM Modi and FM Jaitley have their work
cut out as they chip away at slow growth,
unemployment and price rise in their bid
to chisel the economy into shape. What
they have tried to do is lift the mood of
their strong middle-class constituency by
leaving them with a bigger share of the
rupee through a slew of tax breaks
T
he Ganga has always been far more than
just a river. Worshipped as a mother
goddess, it commands unique reverence in the
Indian psyche. Sadly, its alarming pollution has
also come to symbolize a hopeless failure of
governance. Little wonder that PMand Varanasi
MP Narendra Modi has made an evocative pledge
to clean it up and nance minister Arun Jaitley
has allocated over 2,000 crore for the purpose
in the Budget. As India waits to see if Modi can
deliver on his promise, TOI presents River Sutra, a
photo series on the ebb and owof life along the
banks of the Ganga | Pages 2-13
RIVER SUTRA
I
ts been 10 years since an NDA government
was last in ofce. TOI takes stock of howIndia
and the world have changed, dus saal baad a
theme that also runs through almost all the
panels on the special Budget pages | Page 15
DUS SAAL BAAD
Imaging: Chanchal Kumar Mazumder
www. ti mesofi ndi a. com
SPECIAL
EDITION
TRIPLE TREAT | Tax exemptions on income, investments
like PPF and insurance, and home loans up 50,000 each
BOOST FOR EDUCATION, HEALTH | 5 IITs, 5 IIMs, 4 AIIMS,
12 govt medical colleges, 2 agriculture univs to be set up
GAMBLING ON GROWTH| Targets low deficit of 3% of GDP
in 2 yrs, betting on revival despite poor rains & global risks
NEW TAX MIX | Service tax collections to overtake
customs/excise; levy extended to radio cab, AC bus rides
OLD & NEW | NRI fund, 2,000 cr to clean up Ganga; plans
for metros in 2mn-plus cities, 7,000 cr to build smart cities
FOREIGN FUNDS WELCOME | FDI cap for insurance, defence
raised to 49%; area, capital norms for construction eased
500 crore for IITs, IIMs, P 21
UNiON
BUDGET
2014
FOR INVESTORS
SMOOTH |
Annual limit for
PPF investment up
from 1L to 1.5L
Deduction for
investment in New
Pension Scheme
available to all pvt
sector employees
Minimum pension limit under employees
pension scheme set at 1,000 per month
ROUGH| Lock-in for long-term capital gains
tax on sale of listed non-equity MFs raised
to 3 years, tax rate up from 10% to 20%
MONEYFESTOI
Take a joint home loan, get a break on your kids school fees...
TOIs guide to max your tax savings, because every rupee saved
is a rupee earned. SPECIAL 3-PAGE PANORAMAFROMPAGE4
TOI.COM OPINION POLL
RATING THE BUDGET
82%
FOR ME
GOOD
BAD
18%
FOR INDIA
84%
16%
GOOD
BAD
Portuguese crisis
fears hit sensex
but investor wealth
up 89.3 lakh cr as
non-index stocks
rise. FIIs and FIs
both net buyers
SENSEX
-72
SMOOTH ROUGH
&
Long On Words,
But Short On
Radical Reform
Cheers Taxpayers
By Putting More
Cash In Pockets
*With 3% of tax liability added as
education cess and 10% surcharge
on incomes of Rs 1cr or more
Income Tax Rate
Up to 2.5 lakh NIL
2.5-5 lakh 10.30%
5-10 lakh 20.60%
10 lakh-1cr 30.90%
1cr & above 33.99%
A BRIEF CASE FOR BUDGET TRAVELLERS
Jaitley gives
himself a break
S
omething unprecedented
happened at around
11.45am: Jaitley took a four-
minute break mid-speech due
to back trouble. The FM is
learnt to have been putting in
18-hour days, often ignoring
calls by his wife asking him
to get some rest. When he re-
sumed speaking, he did so
seated. But that didnt stop
him from almost breaking the
record for longest Budget
speechheld by another NDA
FM, Jaswant Singh, who
clocked 2 hours, 13 minutes
in 2003. Excluding the break,
Jaitley spoke for 2 hours, 10
minutes. This is one record
he may not mind missing!
Sin tax on gutka,
cigs, soft drinks
W
hat you might save in
taxes, you will blow up
in smoke if you havent yet
kicked the butt. For, the FM
has proposed a hefty hike in
excise duty for cigarettes, ci-
gars, pan masala and gutka.
Jaitley has hiked tax on eve-
ry tobacco product from
11% to 72% on cigarettes,
cheroots and cigarillos, 12%
to 16% on pan masala, 60%
to 70% on gutka and chew-
ing tobacco, 50% to 55% on
unmanufactured tobacco.
Concern for health also led
him to hike excise duty on
soft drinks by 5%. Doctors
will be happy, but it wont go
down well with kids. P 8
A
run Jaitley spoke over 16,000 words in his
speech, in which the word I figured 204
times, shows an analysis of his speech using
online tool WriteWords. Every 81st word Jaitley
used was an I. But the FM with the highest I-
Q was P Chidambaram whos first, second,
third, fourth and fifth in the list of FMs fond of
the first person singular. According to an anal-
ysis of 67 previous Budgets (not including in-
terim ones), Chidambaram used I with the
highest frequency in 2013-14 once every 55
words. This frequency was lower in Chidam-
barams earlier stints as FM, but not by a wide
margin. In 2005, 2007 and 2008, he used I once
every 59 words. His 1997 speech was more
modest, but by only one word. Jaitley actually
comes a distant 19th in this list of 67 speeches.
The rather self-effacing Manmohan Singh
used I only once every 87 words in his land-
mark 1991 Budget. But the least I-inclined of all
FMs was Jawaharlal Nehru he used I only
once every 276 words.
B
ollywoods Rs 100-crore club is often criti-
cized for turning script into formula and film
into circus. Arun Jaitley joined the club on
Thursday, not once but many times over after
he announced a long list of schemes pegged at
the round figure. Madrasa uplift? Rs 100 crore.
Tribal welfare? Rs 100 crore. Ghat development?
You guessed it, Rs 100 crore. In all, there were
28 plans tied up to that amount. Social media
had a ball. In comparison, Jaitley provided
Rs 200 crore for a mammoth statue of Sardar
Patel, which attracted robust flak. P 13
New FM scores 204 but lags behind PC in I-Q
100cr each for 28 schemes, 200cr for statue
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