Union Budgets always tend to leave an impact on saving instruments or other financial instruments. Here are 8 such instruments that have been impacted by the Union Budget 2014.
Now pay 2 per cent TDS on insurance maturity proceeds
Beginning from Oct 1, 2014, each time you receive an insurance maturity proceeds there would be a TDS deduction of 2 per cent. This is of course if the premium paid is more than 10 per cent of the sum assured.
Long trem capital gains rate hiked
Non-Equity Debt Mutual Funds have been dealt a blow as the Union Budget has redefined long term to 36 months from the earlier definition of 12 months for non-equity funds. This means that while earlier, you paid long term capital gains after one year, now you have to hold the same for 3 years for non-equity funds. The Budget has also increased the long term capital gains tax for non-equity funds from 10 per cent to 20 per cent.
PPF now becomes an excellent investment
The amount you can invest in Public Provident Fund (PPF) has been increased to Rs 1.5 lakh from the earlier limit of Rs 1 lakh. A bonanza for investors as PPF offers interest free income as well as tax benefits under Sec 80C of the Income Tax Act.
The popular Kissan Vikas Patra is back
The Kissan Vikas Patra (KVP) has been re-introduced in the Union Budget 2014. The KVP had been discontinued over worries of unaccounted money finding its way into the scheme. Interest rate on the scheme is not yet known.
Safety as well as insurance
Now, there would be an option to invest in the National Savings Certificate (NSC) with insurance. How effective this would be only time would tell.
Tax savings bank deposits and other instruments may benefit
All other instruments that have tax benefits under Sec 80C, including bank deposits would benefit from the move.