Union Budget 2017: What to expect?

Nutan Gupta

27 Jan 2017

The age old tradition of announcing the budget on the last day of February has been advanced by a month to February 1. This move will speed up the financial planning process for the upcoming year and the government will also get more time to implement all the financial decisions by April 1. Moreover, another change that has been made is scrapping the practice of announcing a separate Rail Budget altogether. The Cabinet has decided to merge the two budgets and announce it on the same day.

The Indian economy is reeling from the after effects of demonetisation and hence this budget holds a lot of importance. Let us have a look at the economic outlook for 2017-18.

Economy Outlook

The GDP is expected to grow at 7.5% in 2017-18E and will be supported by growth in agriculture and recovery of private investment in the medium term.

The CPI inflation is estimated at 4.5% in 2017-18E, given a normal monsoon and increased food supply.

The fiscal deficit is expected to come down to 3.4% in FY17-18E on account of the increase in excise duty on oil and petroleum products which will help in narrowing down the deficit gap.

The government is expected to bring in a lot of new reforms along with stable commodity prices. The subsidy is expected to be restricted at Rs. 230k crore.

Here are 4 major announcement that a common man can expect from the Union Budget of 2017:

Revision of Tax Slab Rates

Demonetisation had a lasting impact on the common man. In order to provide some relief to the aam aadmi, the government can increase the current tax exemption limit from Rs. 2.5 lakh to Rs. 4 lakh. Moreover, the government can also consider revising the slab rates.

Allow higher deduction for interest paid on housing loan

The real estate sector has faced the brunt of demonetisation in a big way. Sales have declined substantially over the last couple of months. The real estate sector contributes to the overall growth of the country substantially. So, it is very important that this sector revives sooner. One such way to boost this sector is to allow higher deduction on home loan EMIs. At present, the tax deduction available for interest paid on home loan is Rs. 2 lakh. The government can consider revising this limit from Rs. 2 lakh to Rs. 3 lakh, which will help the real estate sector to revive, which in turn will also provide a boost to the banking sector.

Increase deduction under Section 80C

At present, the total deduction allowed under this section is Rs. 1.5 lakh. It is expected that this limit will be increased to Rs. 2 lakh in this Union Budget. This will encourage savings among households.

Reduce Corporate Tax Rate

The Finance Minister is likely to announce a reduction in the corporate tax rate from 30% to 25%. Reduction in corporate tax will attract more investment in the country, thereby leading to an overall economic growth.


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Why to Choose Mutual Funds Instead of Directly Investing Into Equities?

Whether to invest in equities or mutual funds is a question that has plagued every investor. As someone who needs the best value for his/her investment should you invest in equity directly or via mutual funds?

Let’s start by first understanding what these two terms ‘equities’ and ‘mutual funds’ stand for-

Equities- Equities generally represent ownership of a company. If you own any equity in a company, you are a part owner of the said company (depending on how much equity you own).

Mutual Funds – It is an investment scheme which is professionally managed by an asset management company. It pools together the resources of a group of people and invests their money in equities, debentures, bonds and other securities.

Why choose mutual funds over equities?

For people who’ve never invested in either stocks or mutual funds, it is hard to know which is better and where to start. Broadly speaking, if you are a novice investor, mutual funds are not only less risky but also way easier to manage. Here are some ways in which investing in mutual funds is beneficial as opposed to investing in equities -

Diversification

Mutual funds provide more diversification as compared to an individual equity stock. When you invest in equity, you are investing in a single company which has its inherent risk. For example, if you invest Rs.20,000 in buying equities of one company, you could face a total loss if that particular company performs poorly in the market.  

If you invest the same amount in mutual funds, it will be invested in different kinds of stocks and financial instruments, high-risk and low-risk both, so you might not face total loss even if one company does poorly.

Scale of Investment and Lower Costs

For an individual investor buying and selling stocks is a difficult task due to its high price. Thus, any gains made from stock appreciation are nullified if the overall trading costs are considered. Comparatively with mutual funds, as the money is pooled from a large number of investors, the cost per individual is lowered.  

Another advantage of mutual funds is that you don’t need to invest large sums of money. Buying equities for a profitable venture needs huge amounts of money, a minimum of few lakhs. With mutual funds, you can start with Rs.1000 and earn profits on that as well.

Convenience

Keeping an eye on the markets everyday is a time-consuming business, especially if you are investing as a side gig. There are people who spend their lives studying the market and still end up sustaining heavy losses. Though investing in mutual funds does not guarantee high returns, it is stress-free and needs less work as compared to investing in equities.

To sum it up

It is important to remember that mutual funds have their own disadvantages as well. Thus, as with any financial decision, educating yourself and understanding the suitability of all the available options is the ideal way to invest. 


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Union Budget 2017: What to expect?

Nutan Gupta

27 Jan 2017

The age old tradition of announcing the budget on the last day of February has been advanced by a month to February 1. This move will speed up the financial planning process for the upcoming year and the government will also get more time to implement all the financial decisions by April 1. Moreover, another change that has been made is scrapping the practice of announcing a separate Rail Budget altogether. The Cabinet has decided to merge the two budgets and announce it on the same day.

The Indian economy is reeling from the after effects of demonetisation and hence this budget holds a lot of importance. Let us have a look at the economic outlook for 2017-18.

Economy Outlook

The GDP is expected to grow at 7.5% in 2017-18E and will be supported by growth in agriculture and recovery of private investment in the medium term.

The CPI inflation is estimated at 4.5% in 2017-18E, given a normal monsoon and increased food supply.

The fiscal deficit is expected to come down to 3.4% in FY17-18E on account of the increase in excise duty on oil and petroleum products which will help in narrowing down the deficit gap.

The government is expected to bring in a lot of new reforms along with stable commodity prices. The subsidy is expected to be restricted at Rs. 230k crore.

Here are 4 major announcement that a common man can expect from the Union Budget of 2017:

Revision of Tax Slab Rates

Demonetisation had a lasting impact on the common man. In order to provide some relief to the aam aadmi, the government can increase the current tax exemption limit from Rs. 2.5 lakh to Rs. 4 lakh. Moreover, the government can also consider revising the slab rates.

Allow higher deduction for interest paid on housing loan

The real estate sector has faced the brunt of demonetisation in a big way. Sales have declined substantially over the last couple of months. The real estate sector contributes to the overall growth of the country substantially. So, it is very important that this sector revives sooner. One such way to boost this sector is to allow higher deduction on home loan EMIs. At present, the tax deduction available for interest paid on home loan is Rs. 2 lakh. The government can consider revising this limit from Rs. 2 lakh to Rs. 3 lakh, which will help the real estate sector to revive, which in turn will also provide a boost to the banking sector.

Increase deduction under Section 80C

At present, the total deduction allowed under this section is Rs. 1.5 lakh. It is expected that this limit will be increased to Rs. 2 lakh in this Union Budget. This will encourage savings among households.

Reduce Corporate Tax Rate

The Finance Minister is likely to announce a reduction in the corporate tax rate from 30% to 25%. Reduction in corporate tax will attract more investment in the country, thereby leading to an overall economic growth.