Budget 2015

Q: I want to buy a property? Do you think budget 2015 will introduce interest cut on home loans?

Utpal Das, Bangalore

28th January 2015

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Replies (10)

Hi,
The Union Budget 2015-16 highlighted that India's economy was presently in an exceedingly bright spot within the world context. This was principally attributed to reduced vulnerabilities regarding the economic retardation, persistent inflation, weakening domestic demand and currency fluctuations. The Budget calculable a GDP rate of 7.4% in 2014-15; and banking upon macro-economic stability, larger financial prudence, high employment generation and economic process is anticipated to the touch concerning 8.1-8.5% in 2015-16. With a reformist government and a benign external atmosphere, India's economy is anticipated to eventually reach a integer growth mechanical phenomenon over consequent few years.

Lokesh Patwa,

17th March 2015

Comment

Hi Guys,

There was a significant emphasis laid on infrastructure creation and the need of public investments in this area. To this end, the Budget announced the formation of a National Investment and Infrastructure Fund (NIIF) at a government spend of INR 20,000 crore, which it is believed will enable it to raise debt and invest through the equity route in companies such as the Indian Railway Finance Corpora tion Ltd. (IRFC) and the National Housing Board (NHB).

Puneet Laskar,

17th March 2015

Hi Guys,

Apart from injecting public money for the event of infrastructure comes, the govt conjointly intends to draw in non-public participation by fixing the present PPP mechanism. sizable stress was likewise set on fund allocations for building roads, ports, railways and airports. A proposal for 5 “ultra-mega“ power comes of four,000 MW every, and a road network of one hundred,000 metric linear unit were created.

Gurmeet,

17th March 2015

Hi,

There is also keenness to encourage ports in the public sector to corporatise under the Companies Act to attract investment and leverage the huge under-utilized land resources under them. The Budget proposed to rationalise the capital gains tax regime for existing sponsors at the time of listing of the units of Infrastructure Investment Trusts (InvITs) as well, which is subject to the payment of Securities Transaction Tax (STT).The appointment of an expert committee has been proposed to examine the possibility and prepare a draft legislation where the need for multiple prior permissions can be replaced with a pre-existing regulatory mechanism.

Kunal,

17th March 2015

The finance department has now increased budgetary outlays on both roads and railways by about Rs. 14,031 crore and Rs. 10,050 crore, respectively. The capex of public sector units (PSUs) is expected to stand at Rs. 317,889 crore, meanwhile, which is an increase of approximately Rs.80,844 crore over the revised estimates for last fiscal. It was announced that investment in infrastructure would go up by Rs. 70,000 crore during 201516 over the previous fiscal period.

Vasanth,

17th March 2015

There is a lot of demand in the market which is being held hard by the affordability factor and we are pretty hopeful that the RBI will bring about a good news for interested buyers. Whole sector is atleast expecting the rates to come down so as to revive the market.

Shalini Parikh, Mumbai

1st March 2015

Comment

The RBI has also introduced a new methodology to ensure that lower interest rates will translate into benefits for both old and new borrowers. The RBI wants to make the methodology of base rates, which are the minimum rates at which banks can lend money to customers, more transparent.

Vasanth,

1st March 2015

Comment

We should not forget the matter realted to the industry status for the real estate. The government should also focus on ensuring a separate industry status for real estate which will help boost domestic bank lending, increase Foreign Direct Investment into the sector and ease external commercial borrowing.

Abhinandan Jain, Bangalore

28th February 2015

Comment

At present, home buyers need to pay service tax, VAT as well as stamp duty when purchasing flats. The Government should ensure the quick passage of Goods and Service Tax which will replace numerous taxes and help the consumers.

Abhinandsavalla, Mumbai

27th February 2015

Comment

Hi Abhinandas,
At the same time setting up a Real Estate Governing body is much required. There is a big need for an apex body which will address the concerns and look into issues from this sector.

Shalini Parikh, Mumbai

27th February 2015

The Real estate sector has been long demanding the setting up of one single window for all these approvals, so that the entrepreneurs can concentrate more on his business and less in running around.The sector hopes to get its long withstanding demand of a single window getting fulfilled in this years budget.

Shrikant Kejriwal, Mumbai

26th February 2015

Comment

We can not forget about the process of opening of new venture. If opening a business is difficult in India, it is approximately 10 times more difficult to close a failed business venture. As a country India should make sure that if an entrepreneur fails in his/her venture, he is able to close his venture without much difficulties and start afresh. The existing process of exiting can be made so much easier if India’s government focuses on digitizing it.

Praveen Modi, Mumbai

26th February 2015

if the finance ministry raises the individual income tax exemption limit, it will have positive impact on long-term spending and saving patterns. More disposable income increases investment appetite, and property is the prime investment instrument of choice for every Indian.

Pranab Malakar,

26th February 2015

Comment

Right Pranab,
The Software Technology Parks of India (STPI) scheme played a major role in the initial success of India's Information and Technology industry. The government needs to introduce such STPI like schemes for startups in order to encourage entrepreneurs to come with more and more unique ideas and startups.

Shantanu Kumar, Mumbai

26th February 2015

Hi Guys,
As per my knowledge, corporate houses want the minimum alternative tax to be cut from 18.5% to 15%. Real estate developers don't want to be taxed for unsold flats. Knowledge economy companies want stock options to be treated as a deductible business expense. Crude oil prices have fallen and fuel prices have come down. But taxi and auto fares have gone up compared to last year

Shailja, Delhi-NCR

26th February 2015

Comment

Yeah. That is right. The aggregate deduction allowed under Sections 80C, 80CCC and 80CCD is capped at Rs 1.5 lakh. This savings basket includes several products, including the Provident Fund, PPF, NSC, tax saving fixed deposits, ELSS funds, insurance policies, Ulips, NPS, repayment of housing loan and even children's tuition fee.

Rajesh, Delhi-NCR

26th February 2015

Hi All,
For many taxpayers, this deduction is quickly exhausted. Last year, the limit had been enhanced to Rs 1.5 lakh but taxpayers want this increased further. A recent Assocham survey of salaried taxpayers across 11 cities had a majority of the respondents saying they want the limit enhanced to Rs 2 lakh. Even RBI governor Raghuram Rajan believes this will help in weaning investors away from physical assets such as real estate and gold to financial products.

Geeta, Noida

26th February 2015

According to me, while the pension products from insurance companies are covered under Section 80CCC, the National Pension System (NPS) is covered under Section 80CCD. However, investments under both sections are clubbed with the investments under Section 80C. The combined deductible limit is fixed at Rs 1.5 lakh. Retirement savings are very long-term products, with the investment phase stretching up to 30-35 years.

Muniraj, Chennai

26th February 2015

Yes Mr Muniraj , that's right. I agreed with your comment. Yet, if the lukewarm response to the NPS is any indication, most investors do not take retirement planning very seriously till it is too late. In a recent survey by Principal Retirement Advisors, retirement planning ranked fifth in the list of financial priorities.

Sujan Mitra,

26th February 2015

Hi All,
According to my thoughts the government needs to encourage retirement savings by giving a separate tax incentive for such investments. "With no social security system in India, every individual needs to save for his retirement. The capital market also needs long-term funds for its development.

Shilpa, Noida

27th February 2015

Hi,

Continuing my previous comment, one way to do it is by carving out a separate limit within the Section 80C for retirement products. While it will nudge investors to change the way they allocate their savings, it will not have a material change in the tax outgo. A separate deduction over and above the Section 80C limit will provide a solid incentive.

Shilpa, Noida

27th February 2015

Hi All,

After going through many arcticles & late night news about budget 2015, I felt that, retirement mutual funds products being readied by mutual fund houses are treated like any other tax-saving mutual fund under Section 80C. They should be shifted under Sections 80CCC or 80CCD. More importantly, the anomaly in their tax treatment should be removed. Right now, only the equity funds among these retirement schemes will be eligible for exemption of long-term gains. Debt funds and debt-based hybrid schemes will not be eligible for this benefit.

Harleen K, Chandigarh

28th February 2015

Hi Guys,

As per many sources, on the other hand, they will be eligible for indexation benefit and any long-term capital loss from non-equity schemes can be adjusted against other capital gains. One major drawback is that shifting from one scheme to another will attract tax. Such shifts are tax free when made in other pension products such as NPS or unit-linked pension plans.

Ravi S, Chandigarh

1st March 2015

Hi All,

I came to know from news that, the dividend distribution tax of 25% (plus surcharge) on all debt mutual funds is very high. This is quite unfair to investors who do not have taxable income. Even those earning up to Rs 10 lakh a year will end up paying more tax than what they pay on normal income.

Therefore, the dividend distribution tax should be removed. On the flip side, this also means that dividends may become taxable in the hands of investors. Meanwhile, investors should continue to use the growth option because tax incidence will be lower there after the indexation benefit.

Meha, Bhiwadi

2nd March 2015

In my point of view, Section 54EC has specified the investments through which one can save long term capital gains tax. But the problem is that they are all debt products and are issued only by a few infrastructure finance companies such as REC, NABARD, NHAI and NHB. A few years ago, one could invest in mutual funds as well to claim the benefit under Section 54EC. This benefit should be restored. Allowing mutual funds into this list will channelise long-term money into the equity markets

lekshmi.sanjeev@ymail.com, Delhi

3rd March 2015

What i am currently feeling after having a lot of buzz in my ear about this budget is , mutual fund industry is going through a consolidation phase. Several schemes are being merged. However, each merger is treated as the investor selling one scheme and buying the other. This is unfair because the change happens without the active participation of the investors. This rule must be abolished, as this will help the mutual fund industry become leaner.

Kanika Kumari, Ghaziabad

6th March 2015

Hi Guys,
Is there any chance of tax incentives for home buyers in budget 2015? Kindly update me & discuss about it.

Bhuvan, Delhi-NCR

25th February 2015

Comment

Hi Bhuvan ,
Several industry experts have also been vouching for such a measure in order to bring back some activity in the market that has remained dull for quite some time now. Home loan rates have been quite high keeping potential buyers at bay. Expected lowering of these rates would play a critical role in pulling the property market out of the doldrums it is in today.

Sujan Mitra,

25th February 2015

In my point of view, another 35 per cent of the respondents said that they would want a higher tax rebate on loan repayment. In the last budget the FM had increased deduction against interest payment on home loan from the taxable income to Rs 2 lakh from Rs 1.5 lakh. It’s been just over six months since the previous budget. The poll also showed that the at least some of the consumers are looking forward to the Goods and Service Tax becoming a reality. Almost 11 per cent of the respondents said they would want the tax to be implemented.

Kalki K,

25th February 2015

Hi Mr Bhuvan ,

As per my knowledge, the deduction is made under section 80C on repayment of housing loan taken from prescribed institutions and on payment of registration fee and stamp duty. It is also made under sections 54 and 54F from capital gains for reinvestment in a house.

Saran,

25th February 2015

@ Bhuvan ,
According to me, Section 80EE provides some additional tax benefit on interest of home loan. However, the benefit under this section would end in this financial year. A deduction for payment of brokerage can be introduced in section 24 of the Income Tax Act, 1961 as many buyers are investors/ real estate brokers who lease their houses to tenants. To prevent misuse, deduction can be restricted to one month's rental income.

Bulbul Verma,

25th February 2015

Recently, RBI governor announced the cut in the interest rates by 25 basis points. Thus, there are chances that banks will lower the rates minimum by .25% for new borrowers, which can go upto 0.50 % also. Rates will come in the range of 9.5-9.8% in coming few days for new home loan borrowers.

Tejesh Kumar, Bangalore

2nd February 2015

Comment