Benifits of Budget 2010

The Union Budget 2010 presented by our Finance Minster Pranab Mukerjee has been received positively by the stock market investors. This is evident from the sharp jump in the indices - Sensex and Nifty.

The Biggest Positive

By far the most attractive thing in the Budget 2010 for individuals is the increase in the income tax slab limits. Though the entry level slab for income tax has not been changed from Rs.1.6 lakhs, there is a considerable jump in the other slabs.

The new proposed slabs for the personal income tax are:

10% – Between Rs.1.6 lakhs and 5 lakhs

20% – Between Rs.5 lakhs and 8 lakhs

30% – Above 8 lakhs

The Union Budget 2010 presented by our Finance Minster Pranab Mukerjee has been received positively by the stock market investors. This is evident from the sharp jump in the indices – Sensex and Nifty.

The Biggest Positive

By far the most attractive thing in the Budget 2010 for individuals is the increase in the income tax slab limits. Though the entry level slab for income tax has not been changed from Rs.1.6 lakhs, there is a considerable jump in the other slabs.

The new proposed slabs for the personal income tax are:

10% – Between Rs.1.6 lakhs and 5 lakhs

20% – Between Rs.5 lakhs and 8 lakhs

30% – Above 8 lakhs

Housing Interest Rate

The Finance Minister has said that the Interest Support of 1% for low cost housing loans will be extended for the next year too. This is a boon for the builders of townships and also the aam aadmi of India who could not afford costly houses. This is a direct form of supporting the recovery of the economy itself.

Support for Rural People

Agriculturists and people livings in rural India can have a breath of relief. The farm loans have been given an extension of 6 months.

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Not only that, new loans will be getting a Government support of 2% reduction in interest rates. Effectively this brings down the farm interest rate to 5%. The earlier support was limited to only 1%.

The rural communities in non-arable areas get support from the continuation of the Mahatma Gandhi National Rural Employment Guarantee Scheme. The budget has allotted Rs.40,000/- crores for this scheme, which is now being implemented across the country.

Micro-Finance Support

Recognizing the major change in development brought about by micro-finance companies in India, the Finance Minister has proposed a Micro-Finance Development Fund to support Micro Finance Companies. At Rs.400 crores, the fund size is small but being with right intention, the gesture is one in the right direction.

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Banks Loans

Rs.16,500 crores has been budgeted for providing the Tier I capital required for some PSU banks. This will improve the lending capacity of these banks. The Budget 2010 has also made additional provisions of capital for lending to Rural Areas.

These measures will not only stabilize banks but also provide the much needed muscle to improve the loan portfolio of PSU banks.

Additional licenses are being planned for private banks. NBFCs will also get a chance to open banks. The modalities will be discussed in detail shortly.

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Overall an Individual Friendly Budget

Based on the above concessions and support for lending and investments, we can conclude that Budget 2010 is very much friendly for the individuals of India. The salaried class may rejoice in their tax out goes coming down in a big way. The Rural Population can cheer over their cash outflows coming down and/or postponed. Banks, housing developers and those buying low cost houses can be happy with the 1% interest support.

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