1. By now so many forwards of tax calculations and 100s of memes have gone around. So my aim here like always is to offer a fresh perspective which you may not have come across on any platform as yet.
2. Also at the very outset, I must say it is a very good budget for the country. Notwithstanding the memes being made by the middle class.
3. For all people who claim HRA or home loan interest rebate old regime better. For rest, the difference is not worth the time you spend discussing the same. That is all I will write on this. The most calculation is already out there.
4. In my opinion and I have the right to be wrong as I spend a huge time on issues which have no or very little bearing on their lives. Sometimes this makes them miss the big picture and avoidable bitterness in future when they discover the reality. The reality is always that unnecessary they wasted their time on a thing which they did not understand correctly or did not have control over.
5. Why such long example in an article on the economy? It was to tell what appears to be good necessarily may not do be of use and vice versa. For life in general and money matters in particular always see the bigger picture. Mota गणित I will call it. Which I did in line.
6. Things which caught my attention were LIC stake sale thing. That is a huge thing for fiscal prudence. Focus on improving the income of poor people. Continued rebates and incentives to affordable housing. A sector which will generate employment and a product at a price point which is desperately required. The country in the last 70 yrs has sorted out roti and kapda. Now makaan thing being addressed.
7. Dividend distribution tax now will be at the hands of the individual. Earlier the company used to pay for it..so as a minority shareholder I used to pay for the tax to big guys and then dividend uses to come to me. Whereas promoters used to give themselves big dividends and no tax on it. Now what will happen they will still not want to pay tax so the incentive of giving dividend will go and profits will have to be reinvested back in business or for some acquisition. This is good for the economy.
8. Most savings and home loans are or were taken for tax thing. The product themselves may not have been good or overpriced and may not have made investment sense. But that tax saving thing was making people take such a decision.
9. Now for a new entrant earning say in IT sector 60K P.M (figure on the higher side as TCS is paying meagre 35K per month), the tax would be 2.5 k per month. Enter the salary. Income tax Returns filled. That's all. A lot many new people will start paying tax to have a better financial history.
10. Consumption will get a boost. We the govt servants and pensioners have secured and assured cash flow. So for us committing money to pf or sip in tax saving instrument is easy. But think of a youngster out who may not have an assured job and his money is stuck in these instruments and he has to sit at home in between for a few months. Or he may get a better opportunity to do something. For him paying 2.5 k tax and flexibility to utilise 60k as per his wish is great.
11. Also, let me be prophetic in predicting the journey of moving towards doing away with all exemptions has begun. I see by 2025 budget it going completely. So keep this in back of mind. Yes, home loans sec 24 will also go. But loans will be from 4 to 5 per cent. Senior çitizens FD wale will be at 4 per cent.
12. This is the hidden message which all shyana lot should get. Low-interest rates are must if the economy has to reach 5 trillion dollars in 5 yrs. Government is clear in its thought process of taking the country forward economically and certain implied things have to be understood ourselves.
Near Future
13. Going forward in the next 4 to 5 years a sizeable number of people about maybe 20 crores will come óut of the poor tag into the lower-middle-class tag. This will almost double the GDP per capita. People who create jobs will also do very well. Government is pushing the bottom of the pyramid up.
14. We are at an inflexion point of changing the orbit in an economic sense. The parallel black economy which sustained the white economy in terms of consumption charmara gayi hai. That's why numbers are 4.5 per cent.
15. Just check the salary of any individual in 2012 and compare now. About 2.4 times difference. Property price in Gurgaon is almost same or up 20 per cent whereas salary is 2.4 times. So things were on steroids then. Now things have been cleaned. NBFC and banks NPA mess almost over.
16. For housing below 23 lakh with all incentives gap between EMI and rent closing in. All those who can do business or invest in stuff which caters for a big population in 25 to 65 k salary bracket. Till 42 k per month income tax is nil.
17. See the DPS teacher and maid example I often give. The rise in salary of maid in big towns has been highest in last 5 yrs.
18. The middle class is feeling the heat. Their income has not kept pace with aspirations. Today a maid earning 5 k from a single housë can do nakhra with memsahib and quit the job at drop of a hat. And still keep her count of 5 kothis intact (5x5=25k). But memsahib and even Saab earning much more can not behave the same way at their workplace. Ýeh middle class ka dard where people of lower strata can give them .. but they can't do the same is increasing. Oyo recently sacked 2000 employees in a week. This is changing India. Doing dosti with maids and becoming a maid provider to others may be a better thing to do then a frustrating job with a thankless boss in a company whose changing business model may throw one out any time. When you advise your kid for a job keep all this in mind. Please take it as a satire on the system.
19. Participate in the economy. The only way to do is make your wife (if not working) do something as because of rules your choices are limited.
20. If your wife teaches maths to your kid of 9th class, contribution to GDP is zero by you. If your neighbour wife teaches her son of 9th class maths then the neighbour contribution/ addition to gdp is zero. But now if your wife teaches neighbour ka son and charges 5 k. And neighbour ki wife teaches your kid maths and charges 5 k. The addition to GDP is 10k. Both will have a financial history and open to benefits.Once this fact comes out that 2 ladies are capable of teaching 9th class students maths and charge 5k for it then more students will come. Then maid ka bachha will come for a special 1-hour class for all maid ka bachha. And you will charge nominal 200 rs only for them. Their numbers will make up for your time. Plus now your maid will not leave your work and behave well also because of बच्चे ki padhai ka sawaal hai. Let your wife start with us using our best intraday tips and we will teach and train her free of cost and she can get more profit sitting at home more than your salary one day.
21. This is economy simplified for you. This is how you progress in life. And for all the homemakers I say this with a lot of respect and brotherly concern. Time to shed the homemaker tag. Nothing great in it. Ladies who work are also not home breakers and chances of their kids doing well or not doing well are almost same as homemakers.
22. Let memsahib or kid open that new company. New start-up tax only 15 per cent utilise this window. It will close soon. It will set things up for the kid.
23. The process for it is Have a plan for memsahib. Get the city right. This is the most difficult part. What works well in one city may not work in all. Spend money wisely. Get a consultant who can be the devil 's advocate.
24. Small is going to be way forward. Maggi packet has come down to 70 gm. Fast goods companies like Unilever make most profits on small sachets. And in the end, this budget is good for the country and what is good for the country can be good for you if you use your imagination well. Else enjoy the memes and amazon prime.
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