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Budget and Personal Finance

AVOID BIG GIFTS FROM FRIENDS

If you are someone who’s used to friends showering you with expensive gifts, there’s some bad news. Postbudget, any gift – in cash or kind (including immovable property) – worth more than Rs 50,000 will attract tax. So, think twice before accepting such gifts.

FACTOR IN PERKS

If you’ve are rejoicing the increase in exemption limit across categories, here’s a dampener that could have escaped your attention: abolition of Fringe Benefit Tax (FBT). While the employers do not have to pay the tax, the tax burden has shifted to employees in case of certain perquisites, puffing up their taxable income. You would do well to take this into account when you undertake your annual tax-planning exercise.

PAY LESS WEALTH TAX

If you were paying 1% tax on your wealth exceeding Rs 15 lakh, you can afford to relax. Thanks to the Budget, now this limit stands enhanced to Rs 30 lakh.

GOLD’S STILL SAFE

The hike in customs duty on gold bars from Rs 100 to Rs 200 per 10 gram means that the cost of purchasing gold ETF units could go up marginally. However, the fact that gold is expected to continue to be a safe haven in the coming months should make you ignore this development.

START INVESTING EARLY

Despite having an entire year to plan taxes, most taxpayers postpone the exercise till March 31 – the last date for making investments allowed as deductions under Section 80C. The first quarter of this assessment year has already passed and you would do well to start planning right away as last minute decisions could prove to be costly later.

COVER YOUR PARENTS’ HEALTH

Buy a mediclaim for your parents to enjoy twin benefits. First, health covers can come in handy at a time when healthcare costs are soaring. Secondly, you can enjoy a tax deduction of Rs 30,000 over and above the Rs 30,000 limit that you enjoy on your individual cover provided you fund their insurance from your bank account.

MAKE MOST OF PPF INVESTMENTS

Invest in Public Provident Fund (PPF) for a decent rate of return and for peace of mind as investments in PPF are backed by sovereign guarantee and cannot be attached in a legal action. Invest in PPF before the 5th of the month to earn interest for the full month.

REFINANCING YOUR HOME LOAN?

Switching lenders makes sense for home loan borrowers only if the new rate is 1-1.5% lower than the existing loan rate, as it involves certain charges. It includes prepayment penalty with the existing lender at 1-2% of the loan outstanding. The processing fee adds to another 0.50-1% of the total loan amount. Factor in these costs and then calculate to see if it makes financial sense to change lenders.

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