A discussion on impact of Union Budget 2021 on Personal Finance and Tax Planning
Watch our financial planning experts demystify the union budget and deep dive into how it impacts personal finance and tax planning.
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00:00 2021 is finally here. The new year brings with it tidings of hope. The vaccine rollout
00:10 is in sight for our frontline warriors and everyone else. The economy is starting to
00:15 normalize and consumer demand is anticipated to rise. As the world picks itself up, we
00:22 too need to reset and start planning and investing with the aim of creating a better future financially.
00:29 Right, before we start planning, let's take a look at the past year and the challenges
00:34 we faced, the pain and anxiety we have overcome and the valuable financial lessons we should
00:40 remember and implement in our lives. 2020 started like any other year, with sounds of
00:46 good cheer. Life was normal. Every day a routine. Get up, go to work, come home, sleep, repeat.
00:55 Then COVID-19 spread and everything changed. We stayed at home. We worked from home. We
01:02 met no one. The economy took a beating. Jobs were lost. Uncertainty prevailed everywhere.
01:11 Our personal finances were impacted and many of us might be worse off financially. As we
01:18 step into a new year, we need to arm ourselves financially to ensure that we are prepared
01:24 for any future challenges that life throws our way, resetting financially. 2020 has taught
01:30 us some valuable lessons. Let's apply these lessons to our life and start working towards
01:36 building a better future financially. Lesson 1. Spend less, save more, stay invested. Before
01:45 2020, movies, eating out and shopping were an essential part of life. Then the world
01:51 locked down. The economic situation became uncertain and we were forced to reset and
01:57 re-evaluate our priorities. We rediscovered the joys of eating healthy home-cooked meals,
02:03 exercising to maintain health and spending time with our families. This lifestyle shift
02:08 has made us realize that we were capable of saving more by practicing mindful spending.
02:14 It has also shown us that while the market fluctuates, it is capable of bouncing back
02:19 and we shouldn't make hasty decisions. Lesson 2. Prepare for emergencies financially. The
02:26 pandemic led to many losing jobs while others dealt with severe salary cuts. Medical bills
02:32 piled up, paying for essentials got stressful and savings depleted rapidly. This disruption
02:38 of life emphasized the need for a contingency fund, which would have approximately 6 to
02:44 9 months of salary to help manage essential expenses during an emergency. Lesson 3. Minimize
02:50 your debt. Prior to 2020, it was easy to swipe a credit card to shop or take a personal loan
02:57 to pay for a holiday and assume you would pay off the debt quickly in the future. Then
03:02 2020 proved life's uncertainty. Job losses and salary cuts led to high interest debts
03:09 adding up and savings getting depleted. These uncertainties and obstacles taught us the
03:14 importance of keeping our debt low and manageable. Lesson 4. Get independent medical coverage.
03:22 2020 has reinforced the importance of medical coverage as a short hospitalization generated
03:28 substantial bills. Ensure your entire family from your children to your parents have adequate
03:34 coverage. Consider getting independent medical coverage which won't be affected by job change
03:40 or a job loss. Lesson 5. Plan your financial estate. Last but not the least, plan your
03:48 family's future. 2020 has shown us that life changes in a blink of an eye. Plan for the
03:54 worst by organizing your estate. Create a will mentioning all your assets, property,
04:00 cars, financial investments and more and who will inherit each asset. If you are a single
04:06 parent with minor children, your preferred guardian. This difficult step will make it
04:11 easier for your heirs to locate your investments and prevent ugly arguments. Now that you know
04:17 what you should keep in mind when planning for a better future, you can start the new
04:21 year on the right note and take control of your finances. Analyze your income and expenses.
04:28 Get a clear understanding of your current financial situation and reset your goals.
04:37 An investor education and awareness initiative of Aditya Birla Sun Life Mutual Fund. Mutual
04:42 fund investments are subject to market risks. Read all scheme related documents carefully.
04:46 Hello everyone, a very warm welcome to all of you as we bring you a special episode of
04:52 this popular investor education and awareness initiative of Aditya Birla Mutual Fund in
04:57 association with Outlook Money. I say special because in this episode we discuss a very
05:02 special budget, the one that followed the economic havoc and unleashed by the coronavirus
05:07 pandemic. I am Vishwi, your host for the day. On February 1st, Finance Minister Nirmala
05:12 Sitharaman gave her budget speech, which was not only welcomed by each and every individual
05:16 of the country, but also by markets that have been on a roll ever since. It was a budget
05:22 that set out to rebuild our economy post pandemic. Perhaps it was also the first time that a
05:26 budget that did not make any changes to the taxation system, that did not bring any relief
05:31 and yet did not disappoint the common man. In today's discussion, we try to unravel what
05:36 the budget means for the taxpayer and the investor. We are joined today by Mr. K S Rao,
05:41 head investor education and distribution development, Aditya Birla Sun Life Asset Management Company
05:46 Limited. Mr. Rao, an alumnus of IIM Calcutta has spent over two decades in the mutual fund
05:52 industry and in his current role, he leads his organization's effort towards investor
05:56 education. We are also joined by Mr. Amit Trivedi, author, speaker, trainer and blogger
06:02 with over 26 years of professional experience in capital markets. As a trainer, he has trained
06:06 over 83,000 participants to almost 1300 workshops across 130 different locations across the
06:12 country. Today, we are also joined by Mr. Gaurav Mashruwala, certified financial planner
06:17 and practitioner. He has a professional experience of over two decades. He has also authored
06:23 several books, including Essential Guide to Carefree Retirement and Yogic Wealth, The
06:28 Wealth That Gives Bliss. The theme of this session is budget and you, personal finance
06:32 and tax planning. So let's get straight into it. And I asked my first question to Mr. Rao.
06:37 Mr. Rao, this union budget for the year 2021-22 is being hailed as one that would bring back
06:43 the economy on the growth path. There has been increased capital expenditure layout
06:50 and overall markets have been doing well post the budget. So how do you look at this particular
06:55 budget, the one that has come after the pandemic, the one year that was kind of very volatile
07:02 for the economy?
07:03 Thanks, Vishal. Good morning to everyone. Indeed, it is great to be partnering with
07:08 Gaurav and Amitji. And thanks to Outlook for this session. We are always grateful for Outlook
07:14 team for taking every time a new creative topic, which is more relevant to the investors
07:21 and to take that informed investment decisions. And of course, this is a very unique budget
07:26 for all of us. And so most of the times we talk in financial planning, budget is a non-event
07:32 for your financial goals. But this time, it is an event for the nation, if not for an
07:38 individual. But it's helping us to recalibrate our portfolios. And I was just looking at
07:44 the data over the last 30 to 40 years and especially last 30 years data on the budgets.
07:50 Probably in 1991, budget is considered to be the one game changer for India in the last
07:56 30 years. Probably this 2021, after 30 years, probably it is expedited. It's giving us next
08:02 decade. It's a budget for the decade, this decade. It's a beginning. And it is showing
08:07 a path and it's like, you know, it's a budget which is giving a light, which is a healthy,
08:13 wealthy and wise, which someone said very rightly. And I was reading in Economic Times,
08:18 Swaminathan's article when he says that this is a courageous and taboo breaking budget.
08:23 And then, of course, budget is truly a pro-growth budget and it's a budget with big ideas. And
08:29 it's like, you know, this big idea stage is set for the next decade. I personally feel
08:36 it's a glorious decade for India is ahead. And this budget has focused on many things.
08:40 How we can look at things is a pro-policy, pro-growth and it's a production link. It's
08:49 a budget which is giving us a path to us. And this time, government has literally broken
08:55 that taboo. I think, you know, fiscal policies, I mean, it's deviating from the fiscal policies
09:01 earlier. You know, fiscal deficits, we are looking at too much. Fiscal deficit targeting.
09:06 And this is a time which has come in the last year when we all struggled and I think 2020
09:11 is a very different year. And 2021, it's like, you know, the year of survival to the budget
09:16 which is giving us a decade to thrive. And it's India's time has just come back to us.
09:23 And I also look at this budget is focused on multiple sectors, which can throw away
09:29 to the economy very differently. If I look at, it's like, you know, when I say big, BIG,
09:35 it is focused on the banking, it is focused on the insurance, and it is focused overall
09:40 on the growth. That growth includes on the infrastructure and the real estate and what
09:46 else. It's like, you know, and automobile. And coming back, I look at infrastructure,
09:51 there is an outlay. You're constructing, it's like, you know, 11,000 kilometers of roads,
09:57 national highway, which you are spending so much of money and which is in turn a cycle,
10:01 you know, it's a cycle which can create employment, which creates a demand and which can create
10:06 the overall economic growth. And on the banking side, there is a reforms like ARC and PSU
10:13 banks, capitalizations, the privatization, which is indirectly meant, I mean, that can
10:18 give a change. And the insurance, there is a change in the FDI. And you know, that can
10:22 give like, not only the partnership from the foreign partners, but also giving the ownership
10:28 to them can be a game changer. Even in the real estate, it's like, you know, REITs, which
10:33 we are talking about and INVITs we are talking about, which can be changed. And the auto
10:37 side, the scrapping of the old vehicles. Overall, I look at this, this will be a booster dose
10:42 for the economy, and that will help the overall economy to grow and earnings will grow. And
10:47 that's where the policy is predicting it. Like most of us predicting at 12 to 13% growth
10:53 this year, and maybe a decade long 7% of the growth. All this put together, it adds a lot
10:58 of value probably, you know, this, I mean, which we talk about 5 trillion economy, which
11:02 is going to be real. And this will pave a path for us. And it's like, you know, we are
11:08 in the right spot. And this is the time we need to recalibrate, which is a class I'm
11:12 sure we will get from Amit Bhai and Gaurav. And I look at this is one of the pragmatic
11:18 budget, it's a proactive budget and progressive budget.
11:21 Thank you. Thank you so much. A progressive budget that will bring the country back on
11:26 the growth path. We are expecting double digit nominal growth in the coming years, after
11:31 a year that completely shattered the economy, which is itself says a lot about, you know,
11:36 the kind of budget that we were expecting and the kind of budget that we got that lived
11:39 up, lived up to the expectations. My next question is for Mr. Mashroorwalla. Mr. Mashroorwalla,
11:45 when it comes to personal finance, what do you think are the key takeaways from this
11:49 budget, only from the personal finance perspective?
11:51 A couple of things. Number one, I'm happy with benefits for senior citizens. As in your
12:03 non-filing of returns if you are pension income, I'm also happy. I'm also happy that they are
12:15 trusting the people. They are saying no more opening of old returns, which are more than
12:24 three years old, which is a great sign. I'm also happy for NRIs. What my concern is that
12:41 there are pay cuts, there are job losses, there are no increments. Now, yes, it is definitely
12:51 a growth-oriented, it's future-looking. But what about this year? People who have lost
13:02 jobs, people who have not had increments, is there anything done for them? And that's what
13:11 I see missing. I see a situation whereby at least for a year, they could have been a little
13:25 lenient with it, temporarily. But people who have lost jobs, who are not able to pay EMI,
13:36 what about them? Give them some benefits. Do it in a manner whereby, while economy will
13:51 come back on track for sure, highly, highly growth-oriented. I'm very happy with the budget,
14:00 but bring back people temporarily to their level and then continue.
14:05 Right. There has been no tax relief for the taxpayer. That is true. And that is
14:16 there was one expectation, which was let down by this budget.
14:20 I see benefits in no tedious individuals. I see a lot of other benefits coming up, a lot of them.
14:29 But save the Muslims for one more year. We can't have growth at the cost of pay cuts, job loss.
14:40 We will anyway have high GDP because it's on lower base. But one more year.
14:48 Right. Absolutely. I'll ask a follow-up question to Mr. Tiwedi. Like Mr. Mashwal has said,
14:57 no relief on personal income tax front. How do you look at this status quo on taxation front?
15:02 So, Bishop, first of all, there was a speculation about a COVID cess. So, I think that by itself
15:14 could have been a big dampener. And to that extent, not touching the income tax rates
15:22 is welcomed by a lot of market participants. But as Gaurav was mentioning, I also tend to agree
15:30 on one particular point that the taxpayers, yes, Vishwas, I mean, has been increased. So,
15:36 Vivaat Se Vishwas is a movement that old files cannot be opened or some of the other measures.
15:45 But I think in this entire fight against COVID, one category is contribution and that category
15:53 happens to be the taxpayer. That contribution was not lauded the way the other COVID warriors
16:00 contribution was cheered. Some relief could have come. Secondly, I think while we talk about tax
16:08 and this question is about tax, but Gaurav's point is very valid. When there is no income,
16:14 tax reliefs don't help or whether any change in tax is made or not, it doesn't really help.
16:20 Overall, not touching the tax every year is actually a good move that you are trying to
16:29 bring stability in the tax structure. Ideally, a tax structure should be such that you need not
16:37 tinker with the taxes every now and then. So, to that extent, stability is always a better idea.
16:44 The other thing is in a couple of cases, they've tried to bring in parity. For example,
16:50 the taxation on ULIP or EPF, the higher contributions, that parity is also a good
16:59 move that product serving equivalent purposes should be treated in a similar manner. There
17:07 should not be a tax arbitrage. So, that's another good move from this budget.
17:12 Right. On that note, I would come back to Mr. Mashruwalla. Now, as you said, no relief
17:19 for the middle class and on the taxation front at least, a lot of job losses have happened,
17:26 a lot of salary cuts have happened. So, now, since the slabs are the same, the deductions are the
17:32 same, we still have the two regimes that exist simultaneously now. So, Mr. Mashruwalla, what
17:38 are some things that one should do when planning taxes for the next fiscal? Should this stick to
17:43 the same plan as last year because there has been no change in the taxation system? Or should they
17:49 do things differently for this year? If the focus is on financial plan,
17:55 then no change needed at all. Because don't keep changing your plan based on tax.
18:05 But if the focus is on tax, then it'll depend on your income level.
18:12 Will your income change? Will your income drop? Based on that, the strategy has to be developed.
18:22 People who have lost jobs or pay cuts, will that level come back to old level?
18:32 Now, if it does, then what you were doing earlier, start doing it. If that does not happen,
18:39 then you are anyway not in the slab. So, then it doesn't matter at all. My
18:48 recommendation will be stick to contingency plan, which we've been saying.
18:57 Ensure there is enough health insurance,
19:05 there is life insurance, payback loans, because that's another problem.
19:13 Right. So, if we are struggling to get out of that and then move on to investment,
19:24 then we have to do it.
19:25 So, last year, a lot of people who faced salary cuts, for them it was a kind of a sudden thing
19:34 that happened. It was not something that was anticipated. And they had to adjust their tax
19:40 planning also and their budgets also. Without any plan, they had to improvise their budgets.
19:49 If their salary brackets are still at that reduced level, but this year, they already know that this
19:55 has happened and this is what we expect to happen this year. So, because they have this extra vision
20:01 of what is happening, which they did not have last year. So, in that context, how should they
20:05 approach their tax planning and their budget this year?
20:10 Is it to me or to me?
20:12 To you. Yes.
20:15 What more can they do? If there is no restoration of income, they anyway don't have money coming in.
20:25 They are struggling. Now, if that's the case, what can they do? We have had situations where
20:34 our middle management, junior management, they also have lost jobs. So, from the taxation
20:44 perspective, you can't do much. What you can do is plan well.
20:51 Okay. All right. Thank you. Thank you for your answer. I will move on to Mr. Rao now. Mr. Rao,
20:56 when it comes to the markets, at least they have wholeheartedly welcomed the budget.
21:01 They have seen a sharp rise post the budget announcement. The markets closed above 50,000,
21:08 cents exposed above 50,000 level for the first time after the budget. So, how do you look at this
21:14 sharp surge in equity markets? Mr. Rao. I think most of us today, when market at 58,
21:20 I mean, some time back, Amit and me, we were addressing few investors. It is at that time
21:25 index was at 45 and what next? And at 50, what next? And probably we may say 55, what next?
21:31 A 60, what next? This is an optimism. I think this budget has given one push for the growth
21:38 and second for the infrastructure revival. And this is the key focus areas of the budget,
21:43 which has given optimism overall. That optimism is bringing back the markets on a surge. And
21:49 I'm sure post-budget markets have gone up by 7% to 8%. And I look at like this, India is a growth
21:56 stock for the world. It is where FIIs are looking at and global investors are looking at. As I said
22:02 earlier, my CIO, Manish Dangi, I mean, over the last three years, I was just looking at him,
22:09 last three months, he had a series of presentations much before the budget,
22:14 which is a glorious decade for India. I mean, with that, I look at India is going to be a
22:19 very promising star. And then that way I look at market, yeah, it may come to a consolidation phase
22:25 now. And there could be some phase where it can stabilize at one place. And while investors
22:30 investing in the market, let us not look at the market and allocate your money, look at your
22:35 goals. I think that's where Gaurav always preaches people on a financial planning or goal planning
22:41 and your allocation is key. And Amit keep telling most of the times when I was with him,
22:47 is like rebalancing and re-allocation is the key. And that's where mutual funds today talk about
22:53 it's a BAF kind of asset, as a screen of funds, where investors can comfortably can look at,
23:00 then asset allocation can happen, part of asset allocation. Now it's like earnings will
23:06 make a trigger in the market next. And I think with the 13% growth, which is expected
23:13 consensus growth for the next year and data stabilizing at 6% to 7%, still I feel the
23:19 markets are fairly priced and one need not look at this PE sometimes misleading for any one of us.
23:26 If I go by only PE, then I can say I may be missing that asset class. If we can go back to
23:33 the history and where FIIs are pumping and we exit and that is a time market goes up and we lose the
23:39 opportunity of that growth. But as an investor, as a personal finance, your budget is the most
23:45 important stuff for you and you need to budget for yourself all this stuff. And you can look at
23:50 your asset allocation is a key and goal-based investment, please stick to that, which we are
23:55 always telling. And your SIPs, again, and I think with your Outlook Forum, we were talking over last
24:02 five to six episodes, where continue your SIPs, never stop your SIPs. I remember you are mentioning
24:08 in the month of June, July, where there's somebody has to stop their SIP until and unless situation
24:13 warrants on the personal finance side, as Gaurab I just said, if there is a job loss, that the
24:17 situation was very difficult, people. But now you continue with your asset allocations and
24:24 now there could be some sector rotations, et cetera, may happen and have your goal-based
24:29 investment. But definitely one has to take that risk and stay put to equity. Equity as an asset
24:34 class definitely outperform as we look at a decade ahead. Probably you need to be a little bit
24:39 overweight to the equities and the volatility can be higher, one need to get prepared for it.
24:45 But that volatility can give you the potential outperformance. This is where Amit Bhai talks
24:50 about the roller coaster ride, this roller coaster ride we need to manage. And this economic recovery
24:57 is real. And if I look at 1991 to 2020 is one era and 2021 to 2030 could be other era. I think that
25:06 part of compounding, the joy of compounding, which will come in a bigger way and one need to be
25:12 overweight. Even somebody who is at a retirement phase, still look at equity as an asset class,
25:18 where Gaurabai talks about in one of his books on the retirement planning as a three bucket
25:22 philosophy. I think your third bucket should go completely to the equity. And
25:27 investors need to rebalance that. Right. I think we are at a high right now
25:37 on this roller coaster and with this kind of market scenario. So Mr. Trivedi, you always talk
25:45 about when there is volatility, that is the real nature of the market. When markets are moving in
25:51 one direction, that is when there is something wrong with it. So in this market scenario where
25:55 we are seeing them climbing new highs every day, every passing week, how should one approach equity
26:02 markets at this particular time? Should there be a caution or should there be more weightage given
26:07 to the equity? Are they the preferred investment avenue right now? Or should one be cautious and
26:12 take a step back and look at the market with some kind of suspicion, some kind of caution?
26:20 Yeah, so Vishal, equity markets by nature are volatile and that volatility is closely
26:29 associated with the perceived risk by investors. Having said that, taking risk is not something
26:38 like one need not avoid risk. Taking risk is more like a choice. You choose to take risk and how
26:45 much risk did you want to take depending on your personal situation and your requirement. So that's
26:51 number one. Number two, since it is a risky asset category, one needs to be cautious anyway. And
26:58 cautious doesn't mean lower allocation. Cautious means plan properly, understand, and invest in a
27:04 systematic manner. That's what caution really means. So there's a very, very interesting question
27:14 in my mind, which I often think about, that people think of equity and considering it is risky, they
27:22 want to run away. But the riskiest thing in the house, in every house, is the fire or electricity.
27:29 And we don't run away from fire and electricity. We only don't play with fire, we use it. We use
27:36 the power of that fire or electricity for our own benefit. Look at equity as a risky asset class with
27:42 the same manner. So you don't put your finger in an open plug point. That's dangerous. That's playing
27:51 with your life. You don't do that. But you put it in a concealed environment, well insulated,
27:59 the way the electricity flows in a wire, and you can really, you know, use it for your benefit.
28:07 Use equity in exactly the same manner. Whatever is happening right now, if I try to understand on
28:14 each day, why the market has gone up, why the market has gone down, that's a futile exercise.
28:19 Nobody on the earth has been able to crack that equation. Because if somebody is able to crack
28:24 that equation, the equation changes. And that's the nature of equity market. So understand your
28:30 own requirement, understand that you are investing in a risky asset. So understand the asset category,
28:36 plan properly and invest systematically. That's the mantra.
28:41 I brought one or two points I missed, and I think we all missed, which I really appreciate.
28:47 It's about allowing a depositor in a bank, like PNC, or Laxmi Vilas Bank, or any other bank,
29:01 where there is a problem, let him allow to withdraw money up to the limit of insurance.
29:09 This was really, really needed. It was important that depositors' confidence is brought back.
29:18 Right. Thank you for highlighting that point, Mr. Mishrawalla. I will again come back to you.
29:27 Since we were talking about markets, and you know, markets are at this high right now,
29:34 there are certain sectors which have seen major focus in the budget also. So is it a good time
29:39 to, you know, review one's portfolio and readjust it to increase exposure to these sectors after the
29:45 budget announcement? What are the things that one should keep in mind to do that? For example,
29:49 there has been increased focus on like Mr. Rao was also saying, like automobile and infrastructure,
29:55 and even real estate. So is it a time to rebalance the portfolio to increase exposure to certain
30:00 sectors? I may not recommend because a lay investor may not be able to pick up the cues.
30:10 Now, if that happens, and if he goes to World War, there will be problems.
30:17 So I would be happy if he continues with a normal fund and let fund manager do the job.
30:28 So instead of investor taking call, let the fund manager take the call.
30:33 Don't go for sectorial funds so soon. Because sectorial funds could be additional
30:44 topping on your portfolio, but they can't be the core portfolio.
30:48 Right. And a follow up question, not just, you know, allocation in terms of different sectors,
30:57 but even people's portfolio have become equity heavy after this surge in the equity markets.
31:03 And the asset allocation now is tilted heavily towards equities. So is there, you know,
31:09 should one consider rebalancing one's portfolio in terms of instruments? And how should one
31:14 approach this particular situation? I don't think changing of instruments will be needed.
31:22 But you already answered yes, if your allocation has changed drastically in favor of equity,
31:28 reduce the equity. Because people go overbought and then they panic.
31:36 Amit Dhan's book, Rollercoaster Rider has spoken about this extensively.
31:49 Don't chase and don't get too risky. It is rollercoaster ride. Don't go overbought,
31:58 rebalance, reduce the equity.
32:00 Right. Thank you. Thank you so much. Is there any, you know, is there any kind of
32:09 step by step guide that you would like to share with our investors through which they can rebalance
32:15 their portfolios? A couple of things. One is obviously liquidating change may not be the best
32:23 idea. Second is future investment. So if it's an SIP or something, modify that.
32:32 If there are any financial goals coming up, liquidate equity or liquidity funds.
32:44 All these are three methods to rebalance the portfolio.
32:48 Thank you. Thank you so much. My next question is to Mr. Trivedi. And this is a question that
32:59 one asks after every, you know, budget speech that has concluded, every budget that has been
33:04 announced. Does this budget leave the common man richer or poorer? Mr. Trivedi, what do you think?
33:12 I don't think there's a direct impact on the person finances only on account of the budget.
33:18 And as Gaurav also mentioned earlier that what has changed is the government's budget,
33:23 not the household budget. So one has to look at it in that context. Given the budget,
33:29 how do you manage your finances is the individual question. Does this budget provide opportunities
33:37 for one to become wealthier? Yes, it does. Does this budget provide enough opportunities to make
33:44 mistakes? Yes, it does. So it's up to the individual to decide whether one chooses the
33:50 path to become wealthier or poorer. All right. Thank you. That's a
33:58 great question. Yeah. Please go ahead, Mr. No, no, I just said I love that answer.
34:04 It doesn't change my budget. Focus on your budget. Right. So a follow up on country's budget,
34:13 focus on your budget. Yes, coming to that point. I would ask all of you this one question. Now,
34:20 the union budget has been laid out. We know what the government plans for the next fiscal for the
34:25 country. But in this backdrop, what are some personal finance lessons that you would want
34:30 our viewers to live with so that they can use it to create their budget for the next fiscal? I ask
34:34 this question to all of you. Maybe we can start with Mr. Rao. Yeah. Thanks, Vishal. I think I
34:40 like last Amit's answer on living the poor are rich. It's what you do. It's the most important.
34:46 And similarly, this budget, like last year, it was really painful for us. Even if I have a proper
34:53 budget for me, I couldn't have managed on various ways because as Gaurav said earlier, there was a
35:00 job losses, there was a pay cuts and people find it very difficult. And this budget has given an
35:05 opportunity to relook yourself and what you need to do. And now since the clarity has come, now it's
35:10 the time for us to look at risk in a very different way. And then the personal finance lessons, the
35:16 first lesson I look at every budget we discuss is this is what we do. We used to do a lot of
35:21 events on the ground with Gaurav Bhai. And we are talking about the union finance minister,
35:26 Honorable Finance Minister Nirmalaji's budget this time. And every year we discuss about the
35:32 budget. But how many of us have our own family budget with a disciplined way? Are we looking
35:37 at? Do we have your income expenditure and your goals, how you're allocating? The biggest personal
35:43 finance lesson is don't look at budget, but look at your own budgets, what you need to look at.
35:49 And we always discuss about India's GDP and now India's GDP on the growth path. And we used to
35:53 talk about what is your GDP, your goals, your dreams and your plans, how many times you are
35:59 focusing on it. And now, during the last year, we are talking about the virus. This year, we are
36:05 talking about the vaccine. And it's like, there is a sea change from the crisis to the opportunity
36:11 today. And there is a like, you know, now at this point of the time as a one personal finance
36:16 lesson, I look at is like the way Madam laid down in this budget, there are six pillars for the
36:21 overall budget, you know, six themes she spoke, health and well-being or financial capital,
36:26 or it could be an infrastructure, or even good rating in human capital and the minimum government
36:32 and maximum governments. Probably for your personal finance, just look at your health and
36:37 your well-being. And what is your finance capital, you know, for your retirement planning or something
36:42 and your infrastructure. This is a time if you have not acquired a house now, like there is a
36:47 real estate, which is looking very promising. Look at your own infrastructure, not only the way you
36:52 need to have with your family and you can look at and reinvigorating human capital, you know,
36:57 this is the time you need to look at your personal side, what are the capabilities you have not
37:02 captured, where the country is growing, how I can make my capabilities useful for the country's
37:07 growth, and where I can invest myself on my capacity, my capability, so that I can enhance
37:15 my earning capability, as well as value addition to the nation. And the last but not the least,
37:21 I mean, you know, government always says it's a minimum government and maximum governance.
37:25 And for your portfolio, you need to have a minimum maintenance and maximum funding,
37:30 so that only once in a year you do that monitoring. And this is we talk about this budget is inclusive
37:36 developmental growth for the nation, all that put together, including development of your personal
37:41 finances, where your financial well being can be much better as we go forward. I mean, one simple
37:47 question, but I gave a little longer answer. I'm sorry. That's okay.
37:50 I like his long answer because then we learn a lot from him.
37:58 Yeah. So Mr. Mashubala, what would you suggest, you know, the common man how to how should they
38:05 approach their budget for the next fiscal? Well, I said I like Mr. Rao's long answers that reduces
38:11 my work. Okay, all right. I'll come to that. Yeah. And he covered well, here is the way I would look
38:22 at it. Look at my GDP, my goals and dream plan. Look at my CEO, my contingency and emergency
38:33 option. Look at my IPO, my insurance and protection option. Look at my equal monthly investment.
38:48 Look at my GST, my goal saving target. Look at
38:55 my
39:03 wealth passing instruments, is nomination and will in place and have my GMT and your
39:10 goal review meeting. Look at me, not outside.
39:14 Right, that's very well put. Thank you. Thank you so much for your response.
39:20 Mr. Trivedi, would you like to add anything to this?
39:24 Yeah, I would, you know, look at the behavior of the finance minister in terms of the way the
39:31 budget is presented. And there are two very powerful lessons that I draw, which could be
39:37 applied to personal finance also. So let's say that the whole problem started as a global pandemic.
39:42 But while presenting the budget, the government's entire focus was on reviving the local economy.
39:50 So though the problem was outside, they look for a solution inside. And similarly, in our personal
39:57 finances also, whatever is happening in the external world, focus on the inside and manage
40:04 the finances. So that's number one. Number two, in a situation where the country faced one of the
40:12 worst economic crises in a few decades, the government has increased the spending, which
40:18 is actually a counter cyclical move. And this exactly is required when the chips are down,
40:25 you become growth oriented. And when everything is hunky dory, you hold back. So you play
40:32 counter cyclical whenever you are, you know, trying to revive your own self, because in a
40:38 rising market, we tend to get overconfident and make mistakes. You know, lower levels or in a
40:45 crisis situation, we tend to be fearful. It's exactly at that time that courage has to be
40:51 demonstrated. So these are two messages that don't focus externally, focus internally. And so long as
40:58 possible, can you play counter cyclical so that your emotional roller coaster is where the ride
41:03 becomes smoother. Amit Bhai and Professor Rao, does it remind you of olden times where in drought
41:11 situation, kings will kind of get well constructed roads, so economy revives?
41:19 Absolutely. So those are the wise kings, who used to do that. Those who are not wise and where the
41:27 kingdoms actually collapsed, were when in boom times, they would construct and in bad markets,
41:34 they would, you know, hold back, whereas the government has acted counter cyclical. And this
41:38 is precisely how I would also suggest people to behave.
41:43 Thank you. Thank you so much. I have some questions from the audience also. So Mr.
41:50 Satish Panchal from Mumbai, he wants to ask, is there any impact of the budget on debt mutual
41:59 funds? Are they going to be impacted? Not as a debt mutual fund, yes, the borrowings and all
42:09 the instruments and zero coupon and all but direct debt mutual fund, I don't think.
42:15 Okay, so there are a couple of things on the debt markets where, like Gaurav was mentioning,
42:20 there's nothing on the debt mutual funds directly, but something on the debt markets. One is
42:26 creation of an institution, which would be able to buy investment grade bonds from the market.
42:34 I think if that is implemented well, that should provide a good amount of liquidity,
42:40 because currently the debt market, the largest liquidity provider happens to be the debt mutual
42:45 funds. If an institution also comes up and provides liquidity, I think it augurs well for
42:52 debt mutual funds per se. That's number one. Number two on the debt markets, people are
43:00 concerned that while equity markets cheered, debt markets marginally went down because of the fear
43:06 of increased fiscal deficit, which would lead to increasing inflation, which would lead to rising
43:11 interest rates. But on the other hand, if the interest rates move up, then a large part of
43:20 savers, they can look forward to increased nominal interest earning, currently, which are at a low
43:28 level. So this is another development that I see. The third development, according to me, is
43:34 where a lot of infra projects would need a lot of funding. And that also means that the debt market
43:46 may become a little more vibrant, which would eventually augur well for the debt mutual fund
43:51 investors also. Mr. Rao, would you like to add anything?
43:56 No, investors need to take care of your investment tenure with the fund maturity
44:01 tenure. For example, I have a three months money put into your bucket, you have that discipline
44:05 so that you will not, in case tomorrow there is a spike in interest rates, little later in the six
44:10 months, you will not tend to lose much and you tend to gain there. That's where you need to look
44:15 at on the debt mutual fund side. But keep your rest allocation, that's the most important part.
44:20 Right. Thank you, Mr. Sudhakar, sorry, Mr. Nirav Shah from Ahmedabad. He's asking,
44:26 what is your view on short term and long term capital gains tax? And on similar note, Mr.
44:32 Sudhakar from Chennai wants to ask, should SIPs and mutual funds, should they have got an exemption
44:40 and you know, maybe something for future budgets? So these two questions maybe someone can take.
44:44 I don't think there is any change in the capital gains tax structure except making use upon power
44:52 with mutual funds, but that's not on capital gains. What is the question?
44:58 He's just asking, there are two questions basically, not related to this budget, I think
45:04 they're generally asking your view on short term and long term capital gains tax. And another
45:09 person is asking, should SIPs on mutual funds get tax exemption?
45:13 No, but SIP is just a way of investing. It's not something which is, I don't know why any
45:20 tax, but I don't know if Mr. Rao or Mr. Amitbhai wants to add something.
45:25 As regards the question on should mutual funds be exempted or given any preferential
45:33 treatment or SIP be given any preferential treatment, my sense is if we look at the
45:39 intent of the government to bring parity between let's say, employees provident fund contribution
45:47 and the NPS, earlier, the demand from the industry was to make NPS exempt, exempt, exempt.
45:55 Instead of that, the EPF where the contributions are on a higher side, that is taxed. So instead of,
46:03 you know, removing a tax and bring parity, the government chose to introduce a tax and bring
46:10 parity. If that is any indicator of the intent, then I don't think expecting any exemption on
46:19 mutual funds or SIP would cheer you up in any way or it may eventually disappoint you if you
46:27 are expecting that. That's my view.
46:29 Amitbhai's intent to hire with this employee provident fund earlier also and then there was a
46:35 big UN guy that never do.
46:37 It's whether it goes through or not is a different thing. I'm only talking about the intent.
46:44 Yes, the government is trying continuously.
46:47 The government is trying to expand the tax net. They're trying to cover everything under tax
46:55 and in such case, expecting additional exemptions may not be fruitful.
47:01 In fact, this EET proposal was at the time of Chidambaram. Every finance minister has
47:08 tried and they have failed. I hope she kind of brings in parity.
47:12 I agree with Gaurab. I like, you know, there is a, even on this EPF piece, it is painful for the
47:20 taxpayer to calculate what kind of tax, how much he's earning, because your EPF statement itself
47:25 will come a little later, how you can budget, then your accounting and advanced tax. It is
47:30 cumbersome for the people. On one side, we are making the life easy. Here, life is becoming
47:35 a little difficult. Hopefully, there could be some change. I mean, as an investor, I'm also
47:39 talking on that angle. And one good part on the short-term capital gains and long-term capital
47:44 gains is from the next year onwards, you are getting a pre-printed or pre-filled form your
47:55 getting it. I don't need to worry much about what is the short-term capital gains. I need to
47:59 calculate long-term capital gains. I need to calculate all my investments at the back end
48:04 is taken care. All that I need to do is I need to pay my tax rightly. I think, you know, my life is
48:09 becoming a little more easier for investors, I think, but only investors need to go back and
48:14 check whether, you know, they are given, whether their PAN number is right and whether their mobile
48:20 number is right. Otherwise, you may end up underpaying or overpaying. Just ensure that you,
48:25 let us go back and revisit. This is the time you need to go back and check where your investments,
48:31 put it in a map. And like, you know, earlier, Gaurabai's sessions, he used to tell about
48:36 goal planning, how you can put to the goals here. Just look at the broad framework of your
48:41 investments and look at what can come for the short-term, what can come to the long-term.
48:45 Then when the pre-filled form is coming, you can recheck it very nicely. And I personally feel you
48:50 need to have one personal financial advisor. Probably, you know, even for this, you need a
48:55 personal finance charitable accountant for it. Gaurabai, just a question when it comes to pre-filled,
49:01 say if I sold a property and paid brokerage, how would they pick it up?
49:11 There is a possibility. There is a possibility now, because if I can provide a TDS at the
49:16 beginning for the brokerage and which I need to pay while doing that, that is a possibility. Because
49:21 right now, if somebody is buying a house, like, you know, as if you are purchasing,
49:27 you need to pay the TDS first so that it is already accounted there.
49:30 My concern is that if I have incurred legitimate expense, how will government pick it up?
49:36 Yeah, that's the challenge is there. I mean, hopefully, the data which they are using with
49:40 the AI and ML, it is possible to the extent, maybe maximum percentage side,
49:45 yeah, some of the exceptions may happen. They are looking at making the likelihood.
49:49 But even if the forms are pre-filled, there would be a provision for various,
49:57 let's say, various allowable expenses, etc. They may keep that provision, which means
50:06 it's not the final amount that they would give, but large part of the work would be over. But just
50:12 to add to this point, this also means that though the form would be pre-filled, we'll have to do the
50:19 reconciliation at our end and ensure that nothing is missed out. In terms of income or expense?
50:26 Both.
50:32 Absolutely. Absolutely.
50:33 Maybe we can take one more question from the audience. Mr. Mohammed Basit from Dubai,
50:39 he wants to ask, how is the budget going to affect NRIs?
50:43 I don't know if Dubai has retirement funds and that parity that has been brought in for
50:51 the Baltic soil and street, but Ahmed, you want to add?
50:54 One of the provisions which I really appreciated was about the startups where the NRIs,
51:02 it's made easier for the NRIs to start 1% companies for the purpose of startup. I think
51:08 that's a big move and that should encourage a lot of NRIs to come back to India to
51:13 begin their second journey or whatever you may want to call it. That's one. But once again,
51:22 on the taxation front, since there is no change in the personal tax, the same applies to NRIs as well.
51:30 Right. One more thing, I don't know if Lukmani covers, but
51:35 for startups, the relaxation in 1% company rules is a very, very welcome.
51:44 Yeah.
51:45 I don't know if you all cover, but if you all cover, you must point out this particular aspect.
51:55 Right. All right. I think we are almost out of time. I'll ask one question before we conclude
52:01 this session to all of you. From this year's budget, if you were to take one single item
52:06 that stands out according to you, which one would it be? Maybe we can start with Mr. Mushruwala and
52:11 then move on to others. Why do you make me your opening
52:15 best friend? You are a good opening best friend. Because what you do is you say that other people's
52:22 long answers makes your job easier. So I'm making it a little difficult for you. So you can start
52:26 this time. They both are laughing and it's in my face. Honestly, because I face the investor more,
52:38 I'm not saying they are not. The relief in deposits withdrawals from the banks,
52:49 whereby up to your insurance limit, you can take out money is a big, big thing.
52:55 People were losing confidence in banking system. That can't happen. And we have had two instances,
53:06 PMC Bank and Lakshmi Vilas Bank. We can't have repeat of those.
53:16 Mr. Dhrivedi. So I would add to what Gaurav mentioned. According to me,
53:22 there are actually two announcements with the same theme, which is on the investor protection. So
53:27 allowing the withdrawal from the banks, even when the bank is in trouble or moratorium,
53:33 is a big, big move towards investor protection because a bank savings account or current account
53:38 or a bank deposit is not only supposed to be safe, it is also supposed to be liquid.
53:44 So the liquidity was missing in certain cases, we've seen in the past. The second one related
53:52 to investor protection is the proposal to set up an investor charter across financial products.
53:57 So if that is implemented well, then a lot of disputes can be resolved up easily and faster
54:04 for the small investors and investors can actually look forward to better times ahead.
54:09 Amit, are you referring to merging of various SEBI and...
54:15 No, I'm not referring to that various acts, but there is a separate proposal to set up an investor
54:20 charter across the entire financial market. So it's not only about securities market.
54:26 So that will bring in PFRD, IRD, IRDAs...
54:34 No, no, forget about regulators. It is about setting up an investor charter, which
54:39 encompasses the entire financial product suite for the investor. Now, whether the regulators are
54:46 covered or they are looking from the consumer side and setting up a consumer product investor
54:52 protection body. So those operational details will have to be worked out. Finance bill also doesn't
54:58 give a lot of details on that. So that's why I can't comment much on that. But at least
55:04 somebody's thinking that direction of investor protection at a bigger level, because there are
55:12 many cases where the product manufacturers are regulated, but the product sellers have a free
55:17 hand. That can't happen. Or in certain cases, the product manufacturers are protected so long as
55:24 they tick the right boxes and there's no liability. So these things cannot happen. Ultimately, the
55:30 investor needs to be protected, which brings in confidence and more confidence brings in more
55:34 money in the financial markets. Yeah, I agree. I mean, I miss that, but it's really, really
55:39 welcome. It's a big one, according to me. Mr. Rao, what do you think is the key takeaway from
55:44 this budget? This budget, whole budget is a takeaway for me. It is a budget, you know,
55:49 it's focused on inclusive development for an aspirational Indian. And when it comes to the
55:55 personal finance, the big takeaway for me is no tax surprise is a big surprise and you can be more
56:02 comfortable. You don't need to worry, recalibrate how much I need to pay, I need to look at.
56:07 And the last but not the least, when we used to meet a lot many investors on ground, especially
56:13 the senior citizens who are over 75, just they have retired and they have one account, they
56:18 doesn't need to file those returns. That's a big relief for them. It's a personally feel
56:24 is a big relief for them. But this whole budget is a holistic budget. Kudos to Honorable Finance
56:29 Minister. All right. Thank you so much. The point of TD is not being directed on dividend though,
56:37 because a lot of people were not in taxable limit. And then the dividend coming with TD is
56:45 engaging refunded. Right. Right. Thank you so much for your time. On that note, we conclude
56:52 today's session. I hope it was, you know, useful to all our viewers, they would get, you know,
56:57 insight about the budget and how to manage their personal finance, how to create their budget
57:02 for the next financial year. On that note, I say goodbye to all of you. It was a very,
57:07 you know, it was a great conversation. And it was a pleasure having you all here.
57:11 Thank you so much for your time. Thank you. Thank you so much.
57:19 Thank you.
57:19 Thank you.