Budget 2018: Forget hike in exemption limit to Rs 3 lakh, here are 3 better options for FM Jaitley to give tax relief to common man

With the Union Budget 2018 just a couple of weeks away, everybody – including the salaried class – is looking towards Finance Minister Arun Jaitley with much hope. More because this is the last Budget of the Modi government before the 2019 polls and every one is expecting the Budget 2018 to be a populist one, which will help the government woo the masses.

Tax experts say that expectations of the taxpayers from the Union Budgets are always huge. Moreover, this being the last full budget before the elections – the expectation is even higher that this could be a budget for the common man.

For instance, “there is a lot of rumour that the basic exemption limit may be increased from Rs 2.5 lakh to Rs 3 lakh. However, if this is done, this may negatively impact the government’s objective of increasing the tax base. Only 3-4% of the people in India pay taxes and if the exemption limit is increased, this number will fall even further,” says Karan Batra, Founder & CEO of CharteredClub.com.

If this may not be a good step, then how can some sops be given to the taxpayers in the Budget 2018 to reduce their tax burden and give them some relief from the rising inflation and the impact of demonetisation?

1. Change in Tax Slabs

Alternatively, Finance Minister Arun Jaitley may think of changing the tax slabs and the tax rates while keeping the basic exemption limit of Rs 2.5 lakh intact. By doing this, “the government would be able to achieve the twin objective of reducing the tax burden per person while ensuring that the total tax base also increases,” says Batra.

2. Deductibles for children

The Modi government might like to introduce in the Budget 2018 deductibles for the children, who are now adults and wish to take care of their parents. For example, if a scheme was introduced whereby the children could open a retirement savings plan for their parents and claim it as deductible from their taxable income, which would be above the normal Rs 150,000 deduction u/s 80C. “This would encourage more investments to be made, which is beneficial for the government, while the tax deduction would be a welcome relief for the tax payer,” says Chetan Chandak, Head of Tax Research at H&R Block India.

3. Increase in the limits Section 80C deductions, allowances

Finance Minister Arun Jaitley should also focus in the Budget 2018 on increasing the limits of deductions under Section 80C of the Income Tax Act, 1961, as well as several other allowances for salaried employees, which are long due for a revision. For example, the limit of Section 80C deductions may be increased from Rs 150,000 to Rs 200,000. While this will help lower the tax burden of the middle class people to some extent, it will also induce people to invest more in tax-saving schemes, which will boost government revenue and will be a win-win for both. Similarly, there are many allowances whose limits need to be increased in the Budget 2018 as they have become outdated now.

Source- The Financial Express

Canada-India initiative for training of smart city planners

Twenty cities across three Indian states of Punjab, Haryana and Rajasthan are likely to have a fast-track development under a new Indo-Canadian initiative to train smart city planners on capacity-building and governance, according to experts associated with the project.

Under the proposed initiative, a rigorous planning and analysis would be taken up to assess the capacity and investment needs in municipalities, they said.

The 20 cities identified are among the 64 cities in the three states that come under the Atal Mission popularly called AMRUT. The work involves capacity building, reform implementation, water supply, sewerage amongst others.

It is in this context that the Society for Participatory Research in Asia (PRIA) based in India, and Canada-India Centre for Excellence (CICE) at Carleton University is undertaking the initiative to improve the service delivery infrastructure of these cities and thus create opportunities for private investments.

"The joint initiative would leverage Canadian and Indian expertise to address underlying challenges and build downstream receptor capacity," Rajesh Tandon, president of PRIA said.

"The Carleton University and CICE had already carried out considerable work with the Indian Smart Cities Mission. CICE had developed a portal called Smart Cities Navigator to identify market opportunities in India for Canadian investors and companies," Harry Sharma, manager, CICE said.

The proposal aims at training at least 150 official urban planners and designers and builds localised platforms and tools for efficient and predictable planning and execution of "smart cities", they said.

The initiative, researchers said, comes at a time when there are reports that only 7 percent of the Rs 600 crore released by India could be utilised by the municipalities due to lack of governance and capacity building. 

Source- The Tribune

Haryana frames rehabilitation policy for people living in slums on govt land

Haryana urban local bodies minister Kavita Jain said on Sunday that the state government had framed Slum-in-Situ Rehabilitation Policy to provide residential facility to those who have been living in slums on government land in urban areas in the state. Chief minister Manohar Lal has reportedly given approval to the policy. The government would allot houses to such people living in municipal corporations, municipal councils and municipalities by developing colonies under the private-public partnership model.

Jain said the policy applied to slums identified under the Pradhan Mantri Awas Yojanasurvey to be conducted by the state government and situated on the Centre, state or urban local bodies land. She added that a private partner for slum redevelopment would be selected through open bidding process.

The minister said that the developer would pay rent to every household so that the beneficiaries should move to other location and construction will start. The rent for such households in municipal corporations of Gurugram and Faridabad would be Rs 3,000 per month whereas it would Rs 2,000 per month for other municipal corporations. Similarly, Rs 1,500 per month and Rs 1,000 per month would be the rent for all municipal councils and the municipal committees, respectively. The rent would be paid by the developer to the project beneficiaries till the date of handing over the project to the municipality concerned.

The ownership right over the unit allotted to beneficiary would be given after 15 years and during this time the unit would be given to the beneficiary on lease. The lease money would be Rs 20,000 for municipal corporations of Gurugram and Faridabad whereas it would be Rs 15,000 for other corporations. Similarly, Rs 12,000 would be lease money for all municipal councils and Rs 10,000 for municipal committees.

Source- ET Realty

NITI Aayog expects robust GDP growth in 2018-19

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Although the reported GDP numbers have seen a dip year-on-year, the NITI Aayog on Friday said the growth would become more robust in 2018-19.

"The second half GDP growth in 2017-18 has risen to 7 per cent, bringing the annual growth rate to 6.5 per cent. Economic activity has been picking up over the last three quarters and can be expected to strengthen in the coming period with the manufacturing PMI now reading at a five-year high of 54 per cent, and FMCG demand picking up briskly. Hence, the GDP growth will become more robust in 2018-19," NITI Aayog Vice Chairman Rajiv Kumar noted.

He further said the estimates assume significance in the wake of the fact that the higher second half growth came despite a weaning of public sector expenditures which had peaked in 2016-17 on account of the implementation of the recommendations of the Seventh Pay Commission.

As per data released by the Central Statistics Office (CSO) earlier in the day, the growth in GDP during 2017-18 was estimated at 6.5 per cent, as compared to the growth rate of 7.1 per cent in 2016-17. Real GDP at constant (2011-12) prices in the year 2017-18 is likely to attain a level of Rs 129.85 lakh crore, as against the Provisional Estimate of GDP for the year 2016-17 of Rs 121.90 lakh crore, released on May 31, 2017.

On the other hand, Gross Value Added (GVA) at basic constant prices (2011-12) is anticipated to increase from Rs 111.85 lakh crore in 2016-17 to Rs 118.71 lakh crore in 2017-18. Anticipated growth of real GVA at basic prices in 2017-18 is 6.1 per cent, as against 6.6 per cent in 2016-17, the data revealed.

The sectors which registered growth rate of over 7.0 per cent are, public administration, defence and other services, trade, hotels, transport, communication and services related to broadcasting, electricity, gas, water supply and other utility services and financial, real estate and professional services.

The WPI in respect of the groups - food articles, manufactured products, electricity and all commodities, has risen by 2.0 per cent, 2.6 per cent, 0.4 per cent and 2.8 per cent, respectively during April-November, 2017-18.

Meanwhile, the Consumer Price Index (CPI) has shown a rise of 3.0 per cent during April-November, 2017-18.

Source- Business Standard

Natural gas, jet fuel may soon come under GST, but not petrol, diesel

Natural gas and aviation turbine fuel (ATF) may soon come under the Goods and Services Tax (GST), while real-estate, petrol, diesel and electricity will take more time, ET Now reported quoting unidentified government sources. Both aviation ministry and petroleum and oil ministry have made a strong case for bringing ATF and natural gas under the GST.

However, the government may wait for revenue to stabilise before bringing more items under the new indirect tax regime. States are likely to give nod for natural gas and ATF, while not in favour of bringing petrol, diesel under the GST.

In November, industry body FICCI has asked Finance Minister Arun Jaitley to bring natural gas under the GST. A top revenue department official told PTI that as the Centre and states are assured of revenue flows, natural gas can be the next big item to be included.

“To me, it appears that out of the 5 petroleum products, natural gas is an easier candidate for bringing into GST,” he said, adding that a 5% GST, equivalent to that being charged on coal, will benefit states in reducing the price of CNG as well as cooking gas piped into kitchens.

While Arun Jaitley pitched for bringing petrol and diesel under the GST as well, he said it was a decision to be taken by states. “We don’t need to amend any law if petroleum products are to be brought into the GST, but only after the council takes a decision is when it will be introduced,” he had said, adding that the council was awaiting a response from states.

The ‘one nation, one tax’ subsumed at least 17 different central and state indirect taxes under one umbrella to cut tax evasions and reduce corruption.

Source- Financial Express

No agreement for sale, no refund, rules MahaRERA

Dashing the hopes of over 2,500 home buyers, who have invested their hard-earned money in projects promoted by the Bhagtanis, the Maharashtra Real EstateRegulatory Authority (MahaRERA) has dismissed complaints of 15 home buyers ruling that in the absence of a registered agreement for sale, the provisions of Section 18 of Real Estate (Regulation and Development) Act (RERA) do not apply.

This group had booked flats in Bhagtani’s Serenity project in upscale Powai and was given only allotment letters that contained a clause saying their investments will be refunded with a 15% interest if project approvals do not come forth. Similar allotment letters were issued to buyers in Riyo (Mira Road), Sapphire (Dahisar) and Savannah (Kanjurmarg) housing projects.

In its order dated December 29, Adjudicating officer and Member, MahaRERA, Bhalchandra Kapadnis said, “Section 18 clearly stipulates that a promoter is liable to pay interest or compensation if he fails to complete or is unable to give possession of an apartment in accordance with the terms of agreement for sale.”

“The Section 18 clearly indicates that there must be an agreement for sale for invoking Section 18. The allottee gets a refund only when the promoter fails to complete the apartment in accordance with the terms of agreement for sale or he is unable to give possession on the date specified in the agreement. Therefore, in the absence of any agreement for sale, section 18 has no role to play. It is necessary to bear in mind that issuance of allotment letter is the first stage and execution of the agreement for sale is the subsequent stage,” said Kapadnis in his ruling.

‘Builders misused the Act’

“We are disappointed with the ruling. We had huge hopes that now that a regulatory body exists, they will take cognizance of our complaint. The promoter hasn’t signed the agreement with 90 per cent of the buyers in Serenity though many of us have paid nearly 30 per cent of the flat’s cost,” said Col Tej Kohli (retd), one of the 15 complainants who invested Rs 20 lakh in Bhagtani Sapphire project in Dahisar in 2012, but later transferred it for a 1BHK flat in Serenity.

“The promoters have registered only 1 building with MahaRERA to escape their scrutiny and lied to the authority that not a single of the 77 flats have been booked, whereas so many allotment letters were issued and money was collected,” a distressed Col Kohli added.

Manjit Singh, another complainant, told Mumbai Mirror, “The promoter demanded payments up to the first podium, and I paid Rs 40 lakh out of the Rs 70 lakh. Section 13 of RERA says that a promoter has to make an agreement if he accepts more than 10 per cent, but no agreement was made. So, why can’t MahaRERA take cognizance of our complaint then?”

Singh was also duped in a Unitech Mohali project where he paid nearly 95 per cent of the flat cost. But, following Supreme Court’s intervention, Unitech negotiated a settlement with him. “The builder has offered me an alternate flat at the rate given to me five years ago, and we have closed the issue. Just when I thought one issue is closed, this ruling has come. We will definitely appeal,” Singh said.

Source- ET Realty

More housing finance companies to heat up home loan biz

MUMBAI: A sharp increase in the number of housing finance companies (HFCs) is set to intensify the competition in home loans. According to ratings agency ICRA, the overall market size for housing finance is around Rs 15.3 lakh crore as of September 2017 and the overall share of HFCs is Rs 8.5 lakh crore.

Home loan growth, which has been the main driver of increase in bank credit, slowed down from 19% in FY16 to 16% in FY17 and further to 15% Y-o-Y for the 12 months ended September 2017. The HFCs’ loan portfolio has grown at a faster pace than banks on the back of the increase in the number of players — from 57 in 2013 to 91 in December 2017.

Several new groups have entered the mortgage business through a dedicated housing finance company. These include Piramal, Religare, Reliance, Aditya Birla Housing, Edelweiss and IndoStar Home Finance. Currently, HDFC, SBI, ICICI Group, LICHF and Axis Bank dominate the home loan market. Going forward, the other finance companies are expected to increase their share.

While the cost of funds is higher for non-banks, they are able to manage their spreads by lending to developers. With non-housing loan portfolio of HFCs growing at a faster pace, the share of housing loans in the overall HFC portfolio has declined to 67%.

“From an overall retail credit perspective (across lending groups), retail credit growth of housing finance companies was largely range-bound at around 20% over the period September 2016 to September 2017, while bank and NBFCs witnessed some decline in their retail credit growth post-demonetisation. The recovery was relatively better for banks, as it grew at about 17% Y-o-Y in September 2017, driven by the non-housing segment. However, NBFC retail credit growth was relatively lower at about 15-16% during this period,” said A M Karthik, assistant VP and sector head (financial sector ratings), ICRA.

According to an ICRA report, NBFCs’ share in the unsecured consumer credit (excluding microfinance) is likely to expand as more entities venture into this segment for product diversification and higher business yields.

Source- ET Realty