#Budget2017: Tax Slabs Revised But Benefits Not Sizeable
In the absence of social security schemes, India’s taxation policy should be friendlier. The citizens of developed countries including Sweden, Finland and the ones that form part of the Organisation of Economic Cooperation and Development (OECD) pay higher taxes when compared to an average Indian citizen. In Sweden, for instance, an earning member’s taxes could go up to 80 per cent but the citizens are happy.
Unlike India, where every family has to fend for itself — hospital charges at the time of birth, education, dine-outs, entertainment avenues, real estate, medicines, marriages, death, and even divorces. But, if you are in Sweden, retirement pensions, sick leaves, parental leaves, universal healthcare and childcare, and education through to college level are paid for by the government.In Belgium, there is unemployment insurance, family allowances, retirement benefits as well as disability allowances. Consequently, every working hand in India is looking at saving some bit of his hard earned money.
In Belgium, there is unemployment insurance, family allowances, retirement benefits as well as disability allowances. Consequently, every working hand in India is looking at saving some bit of their hard earned money.
The Union Budget 2017-18 was good news for those who formed part of the lowest slab. The tax pressure on them has halved. But to ensure a roof over every head, the Union Budget should have ensured that homes are affordable and within the reach of India’s tax payers. Data show that in the financial year 2012-13, almost 19.18 lakh people were earning below Rs 3.5 lakh.
The actual wishlist:
There was a widespread understanding that the tax exemption limit could have been altered and made Rs 3 lakh per annum for all under the age of 60 years. The salaried class in India would want a change in the existing slabs and the peak rate of 30 per cent ideally be applied to those earning Rs 20 lakh and above. As of now, those earning Rs 10 lakh and above are taxed at this rate. Although the cost of living is much higher in the United States, a head of the household whose income is taxed at 28 per cent usually earns between Rs 89 lakh to Rs 1 crore annually.
The Union Budget 2017-18 could have been a game changer for home buyers if it eased tax pressure across all income segments, which has remained static for the last three financial years. A higher net disposable income would be great news for home buyers. In a country where only three per cent of the populace files income tax, a higher exemption slab could be beneficial. Naturally, home purchases that have been looking down over the past three years would see good times ahead.
However, experts believe that exemption till Rs 4 lakh could not have been a possibility because it would then oust a considerable number of tax payers. At a time when the government is looking at widening the tax base, this does not pose to be a possibility, although, some relief up to Rs 3 lakh was anticipated. It went without a mention.
Industry speak prior to Budget 2017
"We expect some confidence-boosting measures in the upcoming budget, which will put more money in people’s hands, and that itself will bring back home sales to pre-demonetisation levels. Under that, specifically, some cut in the tax rates for middle-income groups will be the most awaited measure. For the long-term, cuts in income tax rate, and possibly in stamp duty for home registration could be measures that may help the real estate industry in getting a jump-start," says Sunil Mishra, Chief Business Officer (Primary Sales), PropTiger.com.
If the tax slabs were uniformly relaxed, not only would have a larger set of home buyers benefitted, it would have allowed those in Tier II and Tier III cities to opt for quality constructions and access to amenities known to be a staple in only niche markets of Tier I cities. Moreover, the Pradhan Mantri Awas Yojana (PMAY) meant for the economically weaker section (EWS) and low-income group (LIG) class needs to turn its attention to the growing middle class as well. Reportedly, there were very few beneficiaries of this system either because of lack of awareness, no motivation or even issues related to documentation.
A higher spend capacity would help the buying crowd to live and like the place they inhabit because more money in hand means better the chances of spending it on conveniences.
Last but not the least, the real estate sector accounts for almost five to six per cent of the gross domestic product (GDP). Besides, a large number of allied industries are dependent on real estate. For the market to revive, one of the most crucial decisions that Budget 2017 could have taken was to help a buyer across income segments to own a higher share of his hard earned money.
At the moment, we can look forward to those that got hold of tax relaxations to go in for suitable housing projects.
Tags: home loans, News And Views, Editor, Modi government, makaaniq, Budget 2017, union budget 2017, Finance Minister Jaitley Budget 2017, tax implications, OECD countries, taxes in foreign countries, tax structure in USA, PMAY updates, social security schemes, total taxpayers in india in 2016