#Budget2017: Was This A Good Budget For Salaried, Genuine Home Buyers?

The year 2016 was for landmark regulatory reforms. However, the Union Budget 2017-18 could have made a big difference. It did, partly! In an attempt to widen the tax net and at the same time ensure that it doesn't pinch the aam aadmi, the Budget Speech sought to 'honour the honest', largely. Hence, tax slabs will now see a revision.

Certain banks had slashed their lending rates owing to the benefits of demonetisation. However, it works to the common man's advantage only if there is a favourable movement in the tax slabs as well. The goal should be to gather every legitimate tax payer under the purview and scrutiny those who are avoiding taxes but the incidence of tax should be lowered so that paying tax should no longer mean burning one's pocket. Those earning between Rs 2.5-5 lakh per annum will now contribute only five per cent as taxes. This was previously 10 per cent.

But what could have really been useful to a potential buyer?

Federation of Indian Chambers of Commerce and Industry recently put forward its demand, “The deduction available under section 24 of the Act is to a maximum limit of Rs 2,00,000 for interest on loan taken for acquisition/construction of self-occupied house property. Given the rising interest rates and the increase in property prices and also to spur the demand for housing, it is recommended the exemption should be increased to at least Rs 3,00,000 per annum.”

Additionally, it was also noted that tax benefits should be available earlier. As of now, buyers can enjoy benefits only after possession. Although they can claim certain deductions, it comes as a saviour only post three, four or even five years after the loan had been taken.

Budget 2016 vs Budget 2017

If Housing For All has to be realised by 2022, property prices need to either drastically go down or buying these should be made attractive. The last budget season was a good push for one-time home buyers who were eligible for an additional Rs 50,000 tax exemption for their property purchase of up to Rs 50 lakh where the loan sanctioned could be anywhere up to Rs 35 lakh. However, the number of beneficiaries under this announcement was limited. Most Tier I cities today have properties that are anyway between Rs 50 lakh to Rs 2.5 crore on an average. Any instance of homes priced below this would mean you are fishing for comfort in a locality where you have to compromise on the infrastructure, amenities, safety, transport or even legality of the project. Hence, if prices cannot be rationalised further because of the cost of raw materials and construction, the least that the urban dwelling, averagely paid prospective home buyer can hope for is an incentive to help him buy a home in a place of his choice.

 More institutionalisation

Be it the lack of institutionalised rental housing or the necessary protection against project delays or even the issue of landlords insisting on cash payments despite demonetisation, there needs to conclusive announcements on these fronts to help soak in the benefits available to home buyers and tenants. Real Estate Act 2016 did address the issue of project delays but the clauses should be dispersed to citizens. It is their right to information.

Social media had been flooding with suggestions ahead of Budget 2017. Union Minister, Arjun Ram Meghwal's Facebook account is one such example.

Jagdish Peswani said, "I expect a five per cent income tax rebate on all debit and credit card spends. It will serve two purposes — a) drive consumption b) achieve the objective of cashless economy. Moreover, rather than providing incentives to builders, provide a higher deduction for loans as Rs 2 lakh is very low. Even if a couple opts for a joint loan, the benefit is up to a loan for Rs 45 lakh. Average loan size in metros should be Rs 75 lakh. So, a deduction up to Rs 3 lakh would be rational.”

Randhir Singh said, “There should be a law by which every property is Aadhar linked while Bhanwer Bhati writes, “Rebate in income tax is required as the salaried class is facing a problem.”

Bhunesh Gupta wrote, “Please make a single window clearance system and platform for assistance, providing loan and conversion of land by the central government against new industry set up especially at the location where the population is less than 1 lakh for a budget of project is between Rs 50 lakh to Rs 10 crore. One should ideally need to submit one project report including the purchase of land without CLU with approval by CA. Once the project is approved by the government then it should be placed on bank loan apps and then banks should manage it. It will increase the competitiveness among banks.”

Interestingly, at a recent event, Meghwal had said, “"I cannot reveal everything which will be part of the budget, but the interest rate will come down...it will definitely come down. There are two issues with income tax-- exemption limit and another is the slab. Both of them will be looked into.” However, there was no mention of interest on housing loans.

After interest rates getting easier, jobs, too, are expected to benefit with startups looking forward to tax benefits. Yet again, tax sops for solar panels and renewable sources of energy and a raise in the HRA limits have been doing the rounds. A large number of people expect this Budget to be about income disclosing schemes too. When it comes to the Modi government, the list of expectations cannot be short!

However, there was no mention of RERA, GST, Benami transactions but corrective measures towards tax incidence on small and mid-sized industries may generate more jobs. There has been some focus on digitisation as well. On the whole, there weren't any shocks, neither too big moves. The real estate sector had a bigger wishlist and so did the salaried class!