Budget 2014 focuses on five Ts

1. Fiscal prudence
2. Vibrant and strong India - Can not be victim of populism and wasteful expenditure
3. Fiscal prudence will lead to fiscal consolidation - we cannot spend today to be financed by future generation
4. 5.7 - 4.7 - 4.5 - reduction in FD was achieved because reduction in expenditure
5. Current Account Deficit (CAD) 1.7% - was due to slowdown of demand and import restriction
6. FD target challenge of 4.1 % for 13/14 accepted
7. Curb black money - take bold steps
8. Expenditure management commission - interim report in this year
9. Budget an enabler for rural development rather than freebies
10  Skill India to emphasis employability and entrepruenership
11. MNREGA to be revamed
12. Urban development of rural areas in the lines of the Gujarat model - using PPP this will be used in other areas
13. Power - government is committed to providing 24/7 power
14. Work with the state governments
15. Agriculture university to be established
16. NABARD
17. Establishing price stabilization fund - private markets - state Govt to play a part increasing competition
18. Blue revolution
19. Credit to agricultural sector
20. Short term crop loans - incentive for timely repayment
21. Kisan Vikas Patra reintroduced
22. Commitment towards Social security -
23. Social security - minimum pension of 1000 per month to all members in the organized sector
24. Additional resource allocation to meet requirement for increase of ceiling of PF from Rs 6,500 to Rs 15000
25. Welfare of senior citizens - Varisht pension yojana - revive the scheme from 15 Aug 2014 for age 60 years above
26. PPF, Post office, savings - unclaimed amount. Committee to be step up on use of this funds to determine what needs to be done for unclaimed amounts

Urbanisation
1. 100 smart cities as satellite towns:
2. Low cost housing - pace of migration to cities increasing - neo middle class - 100 smart cities as satellite cities - 7,060 crores
3. Thrust on sanitation  
4. Development of Metro and light train on PPP mode in Lucknow and Ahmedabad
5. Housing for all by 2020 - scheme by NHB for cheaper credit
6. Slum development

Education
1. 5 more IIM's to be set up
2. 5 more IIT's to be set up
3. Online education

Taxes
1. Authority for Advance Ruling - N0on-resident (NR) to be extened to Resident with a defined threshold by constituting additional benches
2.Income tax Act to be stable and predictable
3. Government has plan of Macro eco plan of higher growth, fiscal prudence and lower inflation and manageable current deficit
4. Housing incentive to be extended
5. Girl Child and women development
6. Digitisation

FIRST TAKE:

CAPITAL GAINS ON MUTUAL FUNDS:

Capital gains arising out of mutual funds and equity-oriented funds are tax exempt if they are held for more than a year.  For debt oriented funds, the capital gain is taxed at 10% .  It is proposed to increase this rate from 10% to 20% to remove the differential taxation with bank fixed deposits.  Further, the period of holding is proposed at 36 months instead of 12 months for considering such assets as long term assets.

Portfolio investment to be taxed as capital gains. This is a good move and removes anomalies.

Reduction of litigation as an objective is a welcome statement.

Some relief to Individual tax payers

No changes in the tax rates. With the objective of relief to small and marginal tax payers,  personal tax exemption from 2 to 2.5 for all individual tax payers below 60 years. Further increase from 2.5 to 3 lakhs in case of senior citizens. There will be no change in rate in education cess.

A measure that was expected has been proposed to encourage long term savings - 80C limit increased from 1 to 1.5 lakhs.

To boost housing for the middle and lower to protect against high cost of finance, deduction for interest for Self occupied House Property 1.5 to 2 lakhs

Recognizing the role of the NRI in the development of India, more encouragement being given to harness support towards health and preservation of culture. Towards this, to create an NRI fund for the Ganga.

Tapati Ghose is partner , Deloitte Haskins & Sells.

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