Budget 2013: Hedge against inflation, new avenues to save tax

Here are some of the key announcements in the Union Budget 2013-14 that pertain to investments and capital markets.

New Avenues to save tax.

New infrastructure debt funds to start in financial year 2013-14.

Issuance of tax-free bonds worth Rs 50,000 crore will be allowed in 2013-14.

GESS liberalized

Under RGESS, a resident investor who has a demat account but has not made any transactions in equity and /or in the derivative segment and has a gross total income of less than or equal to Rs. 10 lakh could claim a deduction of 50% for investment up to Rs 50,000. In the Union Budget, the FM announced an increase in the gross total income limit to less than or equal to Rs. 12 Lakh from Rs. 10 lakh and also proposed that instead of a one time investment, an investor will be able to avail the benefits for 3 successive years.

Cover your investments with an Inflation blanket

Inflation Indexed Bonds/Inflation Indexed National Security Certificates will be launched to ensure that small investors can hedge against inflation.

The cheaper the better

The Securities Transaction Tax (STT) on equity futures and Mutual fund units will be lowered to 0.001%. This will reduce the overall transaction cost for an investor on redemption or sale of units/securities.

Additional Surcharge Tax on the Rich

A tax surcharge of 10% will be levied on all individuals earning a gross annual income of Rs. 1 Cr. & above. However, this will be levied only for one year.

Data provided by DSP Blackrock