Budget recap: What the saver, investor, homebuyer and senior citizen have got so far in Modi era

Budget season is a time for looking back at what we got, what we didn't and also for looking ahead with expectations. Here is a lowdown on what the common investor — the debt/equity investor, the saver, the homebuyer — has gotten so far from Modi.

1) Equity and Mutual fund investors
— Levied long-term capital gains tax (LTCG) of 10% on gains exceeding Rs 1,00,000 from sale of equity shares. This has resulted in overall lower returns for equity investors. Some insurance products have become more lucrative post this change as returns on those products continue to remain tax-free.


— Dividends are no more tax-free for the investors. Instead of companies, the investor is now liable for taxes. High net worth individuals are greater impacted, whereas for those having a lower dividend income, the outcome has been positive.

— Approval to launch Bharat Bond Exchange Traded Fund or Bharat Bond ETF. Highly cost-effective and a good addition in the range of products for investors in debt. This could replace investments in long-term fixed deposits.

— The government has slashed basic corporate tax rate to 22% from 30% while for new manufacturing companies it has been cut down to 15% from 25%. Effective Tax Rate 25.17%. This has indirectly benefited equity investors as companies are making more profits.

2) Fixed instrument backers (Savings, FDs etc)
— Couple of banks like Yes Bank and IDBI Bank failed in recent years – here, bank depositors were protected completely but bond holders had to take a complete haircut on their investments. Recently, bank deposit insurance in scheduled commercial banks was hiked to Rs 5 lakh per depositor from Rs 1 lakh earlier. This will certainly help boost the confidence in the banking system.

— The Reserve Bank of India (RBI) has been successful in bringing down overall inflation in India, within its set target range of 4% +/- 2% pa. This has benefited fixed income investors who are making positive real returns on their investments. This trend has turned during the current pandemic where inflation has gone up but interest rates have been kept subdued.

3) Homebuyers
— The government’s thrust to boost the housing and the real estate sector over the past few years has been witnessing a sea change with the implementation of Real Estate Regulation & Development Act (RERA) and Goods & Service Tax (GST), all of which are expected to improve transparency and build in confidence among homebuyers.

— Recently, a few states decided to slash stamp duty on sale deed documents by 3 per cent from September 1 to December 31, 2020, and by 2 per cent from January 1, 2021 to March 31, 2021. Currently, the rate is 5 per cent in urban areas and 4 per cent in rural areas.

— Differential between the circle rate and agreement value in real estate sale/purchase for the purpose of income tax is being hiked from 10% to 20%.

— The GST rate on under-construction property has been reduced to 5% from 12%, and to 1% from 8% on affordable housing.

4) Senior citizens (retirement)
— Extended tax benefits like interest income from bank deposits is now Rs 50,000 exempt as against Rs 10,000 earlier with no TDS deducted up to this amount.

— Increased medical insurance deduction under section 80D.

— The Pradhan Mantri Vaya Vandana Yojana (PMVVY) pension scheme, meant for senior citizens, has now been extended till March 31, 2023. With the sharp decline in interest rates in recent years, this becomes a very good debt product for Senior citizens.

5) Some other reforms
— The Ayushman Bharat Yojana, now called the Pradhan Mantri Jan Arogya Yojana (PMJAY), aims to be one of the world’s largest health insurance schemes after it is fully implemented for people below the poverty line.

— The RBI has decided to make RTGS available round the clock on all days of the year.

— Faceless Income tax assessment: For the majority of taxpayers, this will make filing of returns and access to refunds much smoother.