[0:00]Hey folks, CA Rachana Ranade here. Today is one of the most special videos of the whole year because today we are going to try and simplify the budget for you. Well, if you have seen the actual speech of Nirmala madam, it went up to almost one and a half hours. I'm not going to take that much of time. I'll try my level best to give you the highlights of today's budget in a matter of around 15 minutes. But what are we going to focus on? This video will be divided into four parts. The very first one we'll talk about the country level impact wherein I'll I'm going to talk about some macro indicators. Then we'll try and understand the sectoral impact, then we'll try and understand the taxation related key aspects, and ultimately, why did the market fall today by almost 500 points? The video is going to be extremely important, so keep on watching the video till the end. Before we move on, I want to make an important announcement. I'm happy to announce a webinar on option selling strategy with discipline and structure. But who should enroll for this webinar? Any person who has basic knowledge about options. So for example, you should know some basic concepts like what is a call option, what is a put option, what is strike price, what is ITM, what is OTM. And this is for all those learners who want to learn about option selling with discipline. You can see all the webinar details on screen and if you want to enroll for this, don't forget to use the coupon code budget to avail an additional 500 rupees discount and this is a limited period offer, so hurry and enroll. Link is there in the pinned comment and description box below. for those who believe that budget is not my cup of tea I'll not be able to understand don't worry it's extremely simple. Whatever we do at home is done at a country level. What do we do at home? We calculate how much would be our expected income, we calculate what would be our expected expenses and whatever is the difference, ideally will be our saving. If not, if our expenses are greater than incomes, then there's a chance that we might have to borrow. Correct? Whatever we do at a household level, same thing is done at a country level. At a country level, income will be estimated. At a country level, expenses will be estimated, priorities will be decided and whatever is the difference between income and expense, will be what? Will be either a surplus or will be a deficit. Okay. What is the scenario? We are going to discuss two points. One we are going to discuss about fiscal deficit, second we are going to talk about the debt to GDP ratio. First, let's focus upon deficit. For India, I'm not going to call out the whole number, I'm just going to round it off, all rupees are in crores, okay? So total revenue for 26 revised estimate was 34 lakh crore rupees. Total expenditure was 49 lakh crore rupees and fiscal deficit was around 15.5 lakh crore rupees. Now if I talk about BE, what is BE? It is a budgeted estimate. What could happen in the next year? So that expected revenue at a country level, India's revenue is expected at 36.5 lakh crore rupees, expenditure at 53.4 lakh crore rupees and fiscal deficit at 16.95 lakh crore rupees. Okay. So if I'm talking about this number, you have to remember one thumb rule, lower the better. Okay? But typically, if you, you know, become like a pro, no one talks about deficit in absolute numbers. Everyone will talk about deficit as a percentage, but percentage of what? Percentage of GDP. Okay? For this financial year 25-26, the revised estimate for fiscal deficit to GDP has come up to 4.4% and for the next year, 26-27, the budgeted estimate is 4.3%. So is it coming down? Yes, again as I mentioned, lower the better. Okay? One more macroeconomic indicator, country level indicator, which was discussed during the budget was the debt to GDP ratio and it was mentioned that for current financial year 25-26, the revised estimate is 56.1% and it is expected to go, the budgeted estimate for 26-27 is estimated at 55.6%. Wow, this is amazing. So always remember, also this number, lower the better. And for India, if you are able to maintain that fiscal discipline, and if you are able to lower down this debt to GDP ratio, it is going to be extremely important for us. Why? See, a lower debt to GDP ratio will signify that there is a great chance that this country will not default ideally, they have enough GDP to cover up their interest payments and their overall repayment. So what happens typically, the probability, I should say, the probability of borrowing money at a lower interest rate is good enough. So for India, are we in a deficit? Yes. How will we cover up that deficit? Possibility number one is print money, but in spite instead of that, what we typically prefer more is borrowing. Now, how can I borrow? Possibility number one, go to IMF and borrow. Possibility number two, issue bonds. So whenever a country is issuing bonds, they can get that issued at a lower interest rate if your debt to GDP ratio is high. I'm not saying this will always happen. I'm just saying that the probability of this happening will be higher. Simple till here, okay? Now why am I emphasizing so much on interest cost and on loans? Because if I were to understand the cash flow of India, where is money coming from? Where is money going to? It is something very interesting. Have a look at this. For India, the maximum, so out of 100 rupees that India gets, maximum 24 is from borrowings and other liabilities. Okay? The second highest is income tax, not corporate tax, income tax. Individuals have given me. Second highest, what India is getting is income tax 21. Third highest, out of 100 rupees, 18 is coming from corporate tax. Okay? And ultimately, 15 is coming from GST. Okay. Now that you have understood how is money coming to India, we also have to understand where is money going out to. So if I want to understand the highest one here is 22, out of 100, is state share of taxes. That's like Central government is paying to state government. But ultimately money is staying in India, so not a big concern for me. The second highest concerns me a lot and the second highest is interest payment which is 20. So this is as good as the second highest outflow for India is because we have taken more loans, interest is, an interest outflow is extremely high.
[6:00]And that is the reason why I'm telling you once again that debt to GDP ratio is extremely important for us. Fiscal deficit is extremely important for us, both these if they keep on going lower, we we may have a probability of raising money at lower interest rate and this amount could ultimately get lowered. Now let's go to a sectoral analysis. The first sector which becomes extremely important from the budget perspective is infrastructure. Everyone looks at what amount is allocated for infrastructure and last year it was 11.1 lakh crore rupees and this year the number is higher and it has gone up to 12.2 lakh crore rupees. Always remember, higher this number, it is going to be better for the stock market. So market temporarily cheered this higher number, ultimately it went down, why? We are going to discuss that later. Okay? So where will this money be spent? Of course, a lot of thing was, I mean, a lot of areas were discussed about the spending of this money in the budget, we are not going to talk about all. I'm just going to talk about two as examples. The very first one is establishment of a new dedicated freight corridor which will connect Dankuni in the east to Surat in the west. That's the first example for how infrastructure will be expanded. And second one, they are going to operationalize 20 new water, 20 new national waterways wherein they are planning to connect mineral rich areas, industrial centers and ports. Okay? So she also mentioned specific states something like Kerala where all these mineral rich areas can get benefited if they can get better connectivity. Now let's move on and understand which sectors got the highest allocation, which ministries got the highest allocation. Now tell me logically, for us, for us us as a country, where is the money coming from? Mainly coming from borrowing. Where is the money primarily going because of, it is going because of interest. Correct? So which ministry should get a highest allocation logically, it has to be the Ministry of Finance, absolutely. So if you check here, out of the allocation, by the way all these rupees are in crores, so I'm just going to read out in short. So out of the total budget of 53.47 lakh crore rupees, which is like 100% allocation, maximum allocation has gone to Ministry of Finance, which is almost 37%. The second highest is Ministry of Defense at 14.6% then Ministry of Roadways, Transport and Highways at 5.79%, then Ministry of Railways, followed by agriculture and farmers welfare, then education and then health and family welfare. So if I were to look at top few sectors or top few ministries, it's about the overall infrastructure, overall nation as a whole and ultimately these will be like Sabka Saath Sabka Vikas category. Right? So it is about inclusion and ambition both put together. Okay? If I want to understand which ministry got a higher percentage allocation, or I can say the growth, where was the growth higher? As compared to previous budget, this budget, if I were to compare these two, where was the growth highest? Is the Ministry of power which got the highest growth in the budgetary allocation at 37.3%. Second one to get a higher growth was 18.18% of Ministry of Fisheries, Animal Husbandry and Dairy. Then was defense, then Railways and Ministry of Education ultimately. By the way, talking about railways, I hope you also heard about high speed rail corridors which are going to be announced, I mean which are announced. Seven high speed rail corridors from Mumbai to Pune, Pune to Hyderabad, Hyderabad to Bengaluru, Hyderabad to Chennai, Chennai to Bengaluru, Delhi to Varanasi and Varanasi to Siliguri. Now, why are these actually proposed? Reason is very simple, they want to connect financial hubs, technology hubs, manufacturing clusters and overall emerging cities so that there is better connectivity, there is faster connectivity and also cleaner mobility. Okay? Now that you have understood about all these basic pointers, now also let's go into other sectors and understand about how, you know, boost is given by the budget. First, let's talk about medical tourism. Okay? Now if you know what is medical tourism, you can just think about it that you have some relatives who are staying abroad. They come here to India for a surgery. Okay? Ideally they are coming here to meet their relatives but they they say that acha aye hai toh let's do some surgery also whichever is required. So they'll do the surgery, they'll meet their friends, family members and they'll go back. So is this pure tourism? No, this is medical tourism.
[10:20]So what is announced in the budget? Five regional medical hubs to be established to promote medical tourism in partnership with the private sector. And here 1.5 lakh caregivers will be given proper training for that. Okay? Second sector that has been brought into focus is the semiconductor sector. everyone knows that existing, there was a provision in the budget, but they have also extended that. So India will basically launch semiconductor mission which is called as ISM 2.0 with an outlay of 40,000 crore rupees for electronic manufacturing components. Electronic components manufacturing. The third one is atomic energy sector. Again this is extremely important because we are focusing on cleaner energy. So the FM proposed to extend the existing basic custom duty exemption on imports of goods that are required for nuclear power projects till 2035 and expanded for all nuclear plants irrespective of their capacity. So basically the intent is that they want more and more nuclear power plants to be set up in India. So for that, whatever importing of you know, smaller parts is required for that, basic custom duty is made is exempted and irrespective of the plant capacity, right? Next one is manufacturing sector and here a specific mention was made in the budget for biopharma manufacturing hub. They want to develop this in India at a global level and that's why the FM proposed biopharma SHAKTI with an outlay of over 10,000 crore rupees for the next five years. Okay? Next sector, let's talk about container manufacturing. Now in this case, FM proposed a scheme for container manufacturing to create a globally competitive container manufacturing ecosystem with a budgetary allocation of 10,000 crore over a five year period. And ultimately, it's the SME growth because or MSME growth which is micro, small and medium enterprises. This is one of the key growth engines for our country and a dedicated 10,000 crore rupees has been allocated for SME growth and 2,000 crores to support micro enterprises because both these are the ones who create champions for the future. Now let's focus on an important part which is about taxation. So just in case you know, you want to read that headline tomorrow, that there's nothing for the middle class and the middle class as usual is overburdened, all these headlines you will most probably get to see tomorrow in the newspapers. And maybe to some extent it is okayish because everyone was, I mean, every time everyone expects rate cuts or some taxation reliefs which was not done today. Uh but there are some exemptions, uh some differences which have been made. What are these? Uh there are a lot of points. I'm going to discuss three pointers. First one is about the capital, it's about the buyback. So let's understand how how would this change for you. Let's say a company announces a buyback and you have those company shares. You offer your shares for buyback and assume that you gain 10,000 rupees in that transaction. Earlier this used to be taxed as dividend and that is why it used to be treated as per your income tax slab rate. Okay? So if you were into the higher tax lab, you were required to pay like whatever 30% and whatever, okay? But now this is going to be treated as capital gains. So if you are a high income owner, then you will get this benefit, whatever, 12.5% if it's an LTCG, 20% if it's an STCG. But if I am talking about promoters participating in the buyback, then the rate is going to be different. Rate on gains in such buybacks, it will be 22% for promoters which are domestic companies. And it is going to be 30% for promoters other than domestic companies. But again, apan me se how many people are going to be promoters of companies, no? So for us, it is important that for buyback now it will be taxed as capital gain. Okay? Next one, which is again very important, it is about a change in TCS. Now, this is especially important if let's say one of your relatives or maybe your friend's relatives or all that, they are studying abroad. Okay? If you are studying abroad and if you are required to send money abroad, earlier TCS was required to be done. Still it is going to be there, but the rates have reduced. Okay? So if I were to give you an example, for education, if you are sending money abroad to pay the school fees, college fees, earlier TCS was at 5%. Now it is going to be done at 2%. Similarly if you are sending money for medical purpose, earlier it was 5%, now it will be done at 2%. Okay? A very important point is also about booking of overseas tour packages. So I'll just give you an example how how this impacts, okay? Assume that you had booked a foreign tour package of let's say 20 lakh rupees. Now, earlier TCS was 20% on that. Okay? Now you'll be like, acha Rachana, we can claim that as a refund, no? Okay, I understand. You you can claim that as a refund afterwards, but when? When you file your income tax return next year, then you will be able to claim the refund, then you will get it. There's a timing difference. And that is the reason why people used to feel that I have to give an additional cash outflow right now. Okay? So now what changes is that instead of 20% TCS, now the TCS will be dropped to 2% and that is the reason why on that original 20 lakh rupees. Where I said earlier TCS was 20%, which would have resulted into 4 lakh rupees additional outflow, now because the TCS rate will be dropped from 20% to 2%, now this will go drastically down to only 40,000 rupees. This entire part is a part of the Liberalized Remittance Scheme (LRS), which allows Indian resident Indians to send money abroad. In short: if you're sending money abroad, you will have to pay less tax upfront. Okay? One more point is about tax holidays for foreign companies though. So this last point is not about people like you and me, it's about foreign companies who want to, who are wanting to use the services of data centers in India. Okay? So you can imagine there is a foreign company who takes the services of data centers in India. Whatever profits the company makes, there will be a tax holiday up to 2047, 2047. Now why is this done? This is done with a need to enable critical infrastructure and to boost investment in data centers in India. Now this tax holiday will be given to a foreign company but it's with a star for whom? It will be given who provide services to any part of the world outside India by procuring data services in India. So you are going to procure the service in India, but where are you going to give the service to outside India? Okay? So I hope this is also understood, but this one is for corporates, not for people like you and me. Now you might be like Rachana, whatever you told was not that bad, right? But then why did market fall by 500 points today? Well, reasons could be multiple, but today's one of the biggest trigger was about STT increase for futures and options. Currently, how much STT do you have to pay for STT on futures? You have to pay currently 0.02% and it has been raised to 0.05%. And if I'm talking about STT on option premiums, it has been raised from 0.1% to 0.15%. Now these changes will not be effective immediately. They're just proposed changes and they'll be effective from 1st April 2026. But the moment this was announced, it was like, are, we are already paying capital gain tax. We are already paying dividend. We are already paying buyback related taxes. Why are you paying? Why are you burdening us with more and more taxes? STT already we are paying. Now you're asking us to pay more. So market did not like this and immediately we saw a correction in Nifty, stocks like BSE fell by almost 7.8%, MCX by around 11.6%. Broker apps like Grow, I mean broking companies like Grow, they fell by almost 5.05%. So that's a big fall, right? So overall because of all these reasons, Nifty fell by almost 500 points today. But uh, you know, all in all, the entire video was made with an intention that you understand key points of the budget in a shorter span because the original speech was around one and a half hour. I think I have tried to make full justice in around 15 to 18 minutes. I hope you liked the effort. I hope you liked the video. If you did, please don't forget to smash the like button. Please don't forget to share this video with your friends. I'll see you in the next one. Till then, take care. Jai Hind and bye bye.
[18:39]You might have come across such advertisements on various social media platforms. Please note, all of these are fraudsters promising unbelievable returns through stock tips. I don't provide any calls or advisory services. I provide only educational content through my social media handles and through my website rachnanade.com and rachnanade.in.
