EV loan to excise duty on fuel: Here're good and bad moves in Budget 2019

THE GOOD

Move: Additional deduction of Rs 1.5 lakh on interest paid on housing loan for first-home buyers with the stamp duty value up to  Rs 45 lakh. Total interest benefit: Rs 3.5 lakh – Rs 2 lakh under Section 24 and 1.5 lakh under Section EEA

Impact: This will encourage the purchase of flats in the affordable housing segment, especially in Tier-2 and Tier 3 cities. Given the high prices in metros, the impact may not be too much

Move: Section 80C deduction on Central Public Sector Enterprises (CPSE) exchange-traded funds (ETFs) under equity-linked savings scheme

Impact: Will encourage retail investors to put money into these schemes. However, there are too many instruments under this section. The benefit is likely to be limited

Move: Raising of tax-free exemption limit from 40 per cent to 60 per cent in the National Pension Scheme (NPS). The rest 40 per cent has to be invested in an annuity plan

Impact: Good move to make National Pension Scheme more attractive. The earlier limit of 40 per cent was a deterrent as the rest 20 per cent was taxed. But the Employee Provident Fund still scores due to tax exemption on the entire amount

Move: Interest deduction of Rs 1.5 lakh on loans taken for the purchase of electric vehicles. This deduction is available for loans sanctioned by a financial institution (including an NBFC) during the period beginning on the April 1, 2019, to March 31, 2023. There is also a proposal to reduce the Goods and Services tax on them from 12 per cent to 5 per cent

Impact: Will encourage the purchase of electric vehicles on loans. Given their higher prices compared to diesel and petrol vehicles, it would make more sense to purchase them on loan. Except the GST proposal, no other benefit for someone willing to purchase it entirely on cash down payment

THE BAD

Move: Increasing excise duty on petrol and diesel

Impact: Prices of petrol and diesel went up by around Rs 2.5/litre on Saturday itself. This will hurt middle-class vehicle owners badly

Move: Rise in customs duty on books, split air conditioners and gold

Impact: There will be a rise in the cost of these goods, which will hurt household budgets. There are also fears that there will be rising in smuggling of gold after this hike. However, many people may be inclined to buy Sovereign Gold Bonds. On Friday, the government announced another tranche at Rs 3,443 per gram. The issue opens today

Move: Increase in tax on the rich

Impact: With the Finance Minister proposing to raise the tax rate by 3 per cent for people earning Rs 2-5 crore and 7 per cent for people with incomes of Rs 5 crore and above, there will be a substantial increase in their tax liability