by admin | May 25, 2021 | Investing, Opinions, Property
By Ankur Dhawan,
The “Housing for All by 2022” mission has set the stage for a robust recovery in the residential property market. In the past two years, we have seen an unprecedented focus on reforms channelised through the Benami Transactions (Prohibition) Amendment Act 2016, demonetisation, Real Estate Regulatory Act (RERA) and the Goods and Services Tax (GST) regime. So, this time, the Budget for FY2018-19 will be much more critical than ever. The provisions, if moved in positive directions, will have the power to continue the momentum and cement home buyers’ confidence.
While so many tough decisions have already been taken, it will be worthwhile to rationalise further the direct tax structures impacting home buyers. I believe that there is room for improvement in some of the prime income tax (IT) provisions meant to incentivise the home buyers.
Deduction on home loan interest: The IT Act has provisions under which a home buyer can claim a deduction on home loan interest paid towards an under-construction property, in five equal instalments for five financial years. But this deduction is included in the overall deduction amount of Rs 2 lakh that one can claim in a financial year.
Also, the condition of equal deduction during five years leaves limited room for home buyers to claim benefit of the current year’s interest paid. Buyers can claim the benefit only after receiving possession of the property and thus there is no benefit during the construction period. Given so many properties are delayed in possession, the interest component paid during construction can also become very high.
Sample this: A home buyer pays Rs 7.5 lakh over five years of construction period as interest towards home loan. In this case, he can claim Rs 1.5 lakh every year, but then this amount is included in the overall limit of Rs 2 lakh, thus making no significant impact on his taxable income.
To provide relief to home buyers as well as encourage investment in under-construction properties, the government should introduce a separate tax benefit for pre-EMI interest during the construction period.
Deduction on interest paid after completion for let-out properties: As budget 2017 has imposed a limit of Rs 2 Lakh on deduction of interest paid for non-self-occupied properties under Section 71 of Income Tax Act, investment in properties for rental have become less attractive. Rental housing is an important part of the housing industry as it provides a roof to people who cannot afford their own houses. To make rental housing more attractive, the government should increase the limit to Rs 3 lakh.
Section 80EE: Under Section 80EE of the IT Act, first-time home buyers are entitled to claim deductions of up to Rs 50,000 a year towards payment for home loan interest, in addition to the limit of Rs 2 lakh defined under Section 80C of the Act, although there are conditions attached to it. Firstly, the home loan should be taken in the period between April 1, 2016, and March 31, 2017. Secondly, the value of the property should be below Rs 50 lakh.
There is a need to review these two conditions. The threshold of property value as Rs 50 lakh deprives many home buyers in metro and Tier 1 cities to take benefit of this deduction. Even the Reserve Bank of India (RBI) defines properties under Rs 65 lakh as affordable properties in metros and Tier 1 cities. Therefore, this threshold should be raised to Rs 65 lakh.
Section 54 & 54F: Under these sections, a home buyer can claim an exemption for long-term capital gains if he/she invests the sale proceeds of one property to buy another within three years. However, the person can lose this benefit if the property is not completed within three years.
This condition penalises a home buyer for a reason which is out of his control. Residential projects take anywhere from 3-7 years and given the present scenario, the period of three years is not realistic. This period should be raised to five years.
The forthcoming Budget presents an opportunity to further build momentum to fulfil the core need of housing for millions and, given the kind of focus and push by the government, the Finance Ministry should leave no stone unturned in contributing towards the cause of “Housing for All by 2022”.
(Ankur Dhawan is Chief Investment Officer, PropTiger.com. The views expressed are personal. He can be contacted at ankur.dhawan@proptiger.com)
—IANS
by admin | May 25, 2021 | Opinions
By Amit Kapoor,
Unlike most countries, the budget is usually an eventful affair in India and is a heated topic of national conversation around the time of its release. The underlying national interest behind it is mostly because the budget holds something for everyone — ranging from a small farmer to a big industrialist. However, from this year onwards, much of its sheen will be off by a bit.
The tinkering of indirect taxes, which was an aspect of the budget that affected everyone in all corners of the country, is not within the Centre’s domain anymore. Since the implementation of the Goods and Services Tax (GST), all indirect taxes — except for customs duty — have to be decided upon by the GST Council instead of being annually altered based on short-term political interests. Therefore, the first budget after the GST reform will be a challenging one for the government.
The fact that this will be the last full budget before the 2019 elections and that the government has already spent all of its budgeted expenditure for this financial year will further complicate matters. The oncoming elections affects the budget in multiple ways.
First, if the Gujarat election results are to be taken as indicative of the national sentiment, the BJP government is more popular in urban areas than it is in the countryside. The recently released CSO growth estimates show why. The farm and allied sector grew at 2.1 per cent in the current fiscal as compared to 4.9 per cent in the preceding year. So, the ailing agricultural sector will receive much-needed redressal in the upcoming budget. In fact, the Finance Minister has already confirmed this. Reviving growth in the sector can also be a viable mechanism for job creation — another economic aspect that the government will be looking to address with the budget.
Second, with the elections around the corner, firming up economic growth will be foremost on the government’s agenda. Investments have declined from 34.3 per cent of the GDP in 2011-12 to 27 per cent in 2016-17. They still do not seem to have picked up. First advanced estimates show that this has further fallen to 26.4 per cent in 2017-18. Estimates of the Centre for Monitoring Indian Economy (CMIE) show that new investment proposals are likely to amount to around Rs 8 trillion ($126 billion) in 2017-18, which would be merely 60 per cent of the new proposals made in 2016-17. This would also be the lowest since 2004-05.
The subdued investment activity has been a result of the twin balance sheet problem that is now two budgets old. Clearly, it has been a difficult dragon to slay. Hopefully, a resolution should be in sight when the Rs 1.35 trillion-bank recapitalisation plan comes into force. The budget will bring about more clarity on the specifics of the plan and how it will affect government finances.
Third, the government will be in a tight conundrum to balance the budget between going populist in an election season and sticking to the fiscal deficit target. It is almost certain that the government will breach the fiscal deficit target this year after revenue collection in the new tax regime is mostly turning out to be lower than expected, forcing the government to borrow an additional Rs 500 billion. This puts the government’s net borrowing at the highest level since 2013-14. Moreover, it needs to be pointed out that this figure does not include the Rs 800 billion meant for bank recapitalisation this fiscal.
Therefore, managing finances for the next fiscal will be a challenge considering the current scenario. The fact that the economy is not growing at full throttle is not helping either. The government will have to take a call on curbing its spending to maintain the deficit and sacrificing growth partly or splurge and maintain a higher deficit next year as well, risking inflation in the process. The elections make it enticing to choose the populist route and breach the fiscal ceiling. A case can be made that growth should be prioritised over maintaining the fiscal target, but reneging on the commitment will diminish the government’s credibility — which is more harmful in the long run. Rewiring the FRBM (Fiscal Responsibility and Budget Management) law to make it counter-cyclical in nature would be a better route to adopt.
All factors considered, this budget presents the biggest challenge to the Modi government since coming into power. Low growth numbers, subdued investment sentiment and a widening deficit when elections are around the corner leave a Herculean task at hand. The balance between populism and fiscal restraint will be difficult to manage. In any case, the document that will be taking the centrestage on February 1 will define the course for a lot of things to come.
(Amit Kapoor is chair, Institute for Competitiveness, India. The views expressed are personal. He can be contacted at amit.kapoor@competitiveness.in and tweets @kautiliya. Chirag Yadav, researcher at Institute for Competitiveness has contributed to the article)
—IANS
by admin | May 25, 2021 | Economy, Markets, News
Mumbai : Domestic macro-economic data indicating easing inflation, coupled with an optimism surrounding quarterly corporate earnings, pushed the key Indian equity indices to record high levels, with the NSE Nifty50 index crossing the 10,700-mark for the first time.
The Sensex and the Nifty50 touched fresh closing as well as intra-day highs as investors’ sentiments were lifted by positive Asian cues, along with a strong rupee and healthy buying in banking, consumer durables and finance stocks, added market observers.
The wider Nifty50 of the National Stock Exchange (NSE) scaled a new intra-day high level of 10,782.65 points.
The Nifty50 rose by 60.30 points or 0.56 per cent to close at a fresh level of 10,741.55 points.
On the BSE, the barometer 30-scrip Sensitive Index (Sensex) surged over 300 points to touch a new high of 34,963.69 points on an intra-day basis.
The Sensex closed at a record high of 34,843.51 points — up 251.12 points or 0.73 per cent — from its previous session’s close.
The BSE market breadth remained bullish as 1,547 stocks advanced as compared to 1,387 declines.
“Markets surged higher on Monday with the Nifty touching a new record high of 10,783. Selling pressure, however, emerged from these highs which saw the Nifty losing some of its morning gains,” Deepak Jasani, Head – Retail Research, HDFC Securities, told IANS.
“Both the Sensex and the Nifty hit record highs on intra-day as well as closing basis. Major Asian markets have closed on a positive note, barring the Shanghai and Hang Seng indices, while the European indices like FTSE 100, DAX and CAC 40 traded in the red,” Jasani said.
In the broader markets, the S&P BSE mid-cap index closed a tad lower by 0.04 per cent, while the small-cap index closed higher by 0.27 per cent.
Vinod Nair, Head of Research, Geojit Financial Services, said: “Market rallied to a new high in line with the start of third quarter earnings season and ease in WPI (Wholesale Price Index) inflation to 3.58 per cent despite rise in CPI (Consumer Price Index) inflation supported the sentiment.”
Official data released during the market hours showed that lower food prices pulled India’s annual rate of inflation based on wholesale prices to a three-month low of 3.58 per cent in December from 3.93 per cent in November.
“Bank Nifty led from the front owing to encouraging growth in industrial activity which raised the expectation for credit cycle improvement, while healthy domestic liquidity and strong rupee kept the direction intact,” Nair added.
On the currency front, the Indian rupee strengthened by 14 paise to close at 63.49 against the US dollar from its previous close at 63.63.
Sectorwise, the S&P BSE banking index surged by 364.85 points, followed by consumer durables index by 268.24 points and finance index by 96.89 points.
On the other hand, the S&P BSE auto index slipped by 235.20 points, oil and gas index by 114.15 points and capital goods index by 64.32 points.
Major Sensex gainers on Monday were: HDFC, up 6.17 per cent at Rs 1,869.95; ICICI Bank, up 3.73 per cent at Rs 329.45; Kotak Bank, up 1.94 per cent at Rs 1,039.15; Tata Steel, up 1.58 per cent at Rs 783.20; and HDFC Bank, up 1.55 per cent at Rs 1,894.65.
Major Sensex losers were: Tata Motors (DVR), down 2.50 per cent at Rs 246.20; ONGC, down 1.85 per cent at Rs 196.55; Hero MotoCorp, down 1.57 per cent at Rs 3,627.75; IndusInd Bank, down 1.41 per cent at Rs 1,681.50; and Yes Bank, down 1.38 per cent at Rs 335.95.
—IANS
by admin | May 25, 2021 | Business, Business Summit, Economy, Events, Large Enterprise, News, Politics
Kolkata : In the shadow of slower economic growth in the country after the implementation of new indirect tax regime and a renewed anti-land acquisition protest at Bhangar in the state, the Mamata Banerjee-led West Bengal government is to inaugurate the fourth edition of its annual two-day business summit on Tuesday that will see participation from over 30 countries.
The authorities are yet to formally announce any list of Indian business captains who would attend the Bengal Global Business Summit (BGBS), 2018.
But industry doyens like Reliance Industries’ Chairman Mukesh Ambani, Steel maker ArcelorMittal Chairman and CEO Lakshmi Mittal, JSW Group’s Chief Sajjan Jindal, city based FMCG major ITC’s CEO Sanjiv Puri, RP Sanjiv Goenka Group’s Chairman Sanjiv Goenka and others are expected to attend this year’s summit.
In an effort to shed the state’s investor-wary image and woo much-needed business capital, the state government had reached out to various parts of the country and even foreign countries in the lead up to the event, being held in the sprawling Biswa Bangla Convention Centre at Rajarhat in Kolkata.
Czech Republic, France, Germany, Poland, Italy, Japan, China, South Korea and the UK are among the overseas nations to be represented at the mega business gathering.
Consul General of China in Kolkata, Ma Zhanwu had recently confirmed 30 Chinese companies would participate in the business meet and according to him, Chinese companies aimed at utilising BGBS and other opportunities towards fulfilling the goal to invest $200 billion abroad every year.
Italy will also be participating in this edition as a partner country in the Summit for the second year in a row, with an expected delegation of more than 30 companies where the sectors most represented will be transport and infrastructure, metals and leather.
A Memorandum of Understanding (MoU) will likely be signed in the leather sector, for new technologies and training programmes.
A high level Polish delegation headed by Marek Magierowski, Deputy Minister of Foreign Affairs responsible for the relations with Asia and economic cooperation, will participate in the BGBS.
Representatives of Silesia, an economically robust region of the east European country, and West Bengal will sign a Memorandum of Understanding on bilateral cooperation.
In order to ensure a strong foreign imprint, the state government organised a series of interactive sessions on business opportunities in Bengal in Germany, the UK and The Hague, Netherlands.
High powered officials and business delegation had also fanned out to China, South Korea in last October and Thailand in last August-September.
According to state Finance, Commerce and Industries Minister Amit Mitra, there would be thousands delegates at the plenary session, including a strong presence from countries where manufacturing units are really strong.
However, key central government figures, most notably Finance Minister Arun Jaitley and Shipping Minister Nitin Gadkari would likely be skipping the summit and their absence could be attributed to the deteriorating relations between the BJP-led central government and the state’s Trinamool Congress regime.
Chief Minister Manata Banerjee has been vocal against the central government’s decision to recall Rs 500 and Rs 1,000 currency notes and implementation of Goods and Services Tax (GST) without enough preparation.
In a desperate attempt to turn things around in terms of investment in Bengal, she has appealed to industrialists time and again to infuse investments in the eastern state, to meet the huge demands for jobs.
Banerjee also frequently tom-toms the state as a zone of “industrial peace” where not a “single manday” is lost due to industrial disputes and gate-way of North east India and South-East Asia.
The state topped the provisional ranking of Ease of Doing Business for implementation of criteria in the Ease of Doing Business reforms though the ranking is dynamic and will continuously undergo changes, until the freezing of rankings.
However, such claims may have lost some sheen in view of the fresh trouble in South 24 Parganas district’s Bhangar, with violent clashes between villagers and the Trinamool’s activists over acquiring land for setting up a power grid project.
The 104-day shutdown and unrest in the Darjeeling, called by Gorkha Janmukti Morcha following the disputes between the state government and the principal party in the Hills, had affected the investment climate in the north Bengal.
However, the situation in the hills has been normalising day by day, the government claimed.
The fresh chapter of the summit would focus priority areas for attracting investment, such as transport, urban development, power, medium and small-scale enterprises, IT and ITeS and infrastructure, health, education, skill, agro and food processing.
The sessions would include sector-wise discussions to project the possibilities and potential of Bengal in front of investors.
The state government is expected to announce its IT policy in the summit and the new industrial policy as the existing one will expire by end of March this year.
According to the state government, the 2015 summit had fetched investment proposals to the tune of Rs 2.43 lakh crore and the 2016 edition received over Rs 2.5 lakh crore of investment proposals.
Over 2.35 lakh crore of business announcements were received by the state in the last edition BGBS.
—IANS
by admin | May 25, 2021 | Economy, Markets, News
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By Rohit Vaid,
Mumbai : The ongoing earnings result season, along with macro-economic inflation and trade data points, are expected to influence the Indian equity market next week.
Market observers opined that global crude oil prices and the rupee’s movement against the US dollar will act as other major triggers.
“Markets next week will continue to focus on earnings of corporates such as Zee, Bharti, Adani, Wipro, MindTree, etc. Earning results, so far, have been in line with expectations,” Devendra Nevgi, Founder and Principal Partner, Delta Global Partners, told IANS.
Companies like Hindustan Unilever, Adani Ports & SEZ, Bharti Airtel, ITC, Hindustan Zinc, UltraTech Cement, HDFC Bank, Reliance Industries and Wipro are expected to announce their quarterly results in the coming week.
Besides Q3 results, investors will look out for upcoming macro-economic inflation data points such as the WPI (Wholesale Price Index) and Balance of Trade figures.
Market participants will also give their first reaction to the IIP (Index of Industrial Production) and CPI (Consumer Price Index) figures which were released after the market hours on Friday (Jan 12).
“Over the next week, market will react to the sharp jump in IIP for November to 8.4 per cent and CPI for December to 5.2 per cent. Restocking in the consumer non-durables space and healthy activity in the capital goods sector are responsible for the sharp increase in IIP,” Anindya Banerjee, Deputy Vice President for Currency and Interest Rates with Kotak Securities, told IANS.
In terms of investments, provisional figures from the stock exchanges showed that domestic institutional investors (DIIs) purchased stocks worth Rs 2,383.11 crore during the week, while foreign institutional investors (FIIs) sold company scrips worth Rs 965.16 crore.
Figures from the National Securities Depository (NSDL) revealed that foreign portfolio investors bought equities worth Rs 554.03 crore, or $88.34 million, during January 8-12.
On the currency front, the rupee weakened by 26 paise to close at 63.63 against the US dollar from its last week’s close at 63.37.
“As far as levels are concerned, we look forward to 63.25-30 as the near-term support for USD-INR and 63.90-64 as a major resistance,” Banerjee said.
As per technical readings, Nifty is expected to surge higher and breach new record highs during the upcoming week.
“Technically, with the Nifty surging higher to new record highs, the underlying intermediate uptrend remains intact,” Deepak Jasani, Head – Retail Research, HDFC Securities, told IANS.
“Further upsides are likely once the immediate resistances of 10,690 points are taken out. Weakness could emerge if the supports of 10,490 points are broken.”
Last week, “consistent investments” from domestic institutions propelled the the key equity indices — the Sensex and the Nifty50 — to close at record high levels.
Consequently, the barometer 30-scrip S&P Sensex of the Bombau Stock Exchange surged by 438.54 points or 1.28 per cent to 34,592.39 points.
Similarly, the wider Nifty50 of the National Stock Exchange made healthy gains. It rose 122.4 points or 1.16 per cent to 10,681.25 points.
(Rohit Vaid can be contacted at rohit.v@ians.in)
—IANS
