To discuss about how to imply relaxation on the norms related to external commercial borrowing (ECB), officials from both Finance ministry and the Reserve Bank of India, may meet this week. Continue reading
P Chidambaram announced the Budget 2013.
Finance Minister announced the Budget 2013 today. This is his eighth finance budget and the first one after returning to the Finance Ministry, as its head last year. The budget slightly slapped the top-earners by imposing overload on their shoulders. Many of the luxury items will become costlier while a few common goods will become cheaper.
Foreseeing the 2014 general election, the Finance Minister remained highly keen to offer some sops to the tax payers (income). On the other hand; by raising the duties on luxury and imported vehicles, mobile phones and cigarettes, the finance minister slapped the ‘ultra-rich’ millionaires of the country.
Tax Proposals in the Budget 2013 -14
The budget proposed to raise an additional Rs.18,000 Cr in the form of tax. However the budget has not made any changes in any of the tax-slabs. Mr. Chidambaram gave a tax benefit of Rs.2000 to all the individual tax payers with income up to Rs.5 lakh.
As there is no alteration and revision of slabs the income payers will have to pay as per the existing slabs. As per the existing rates an individual with income between Rs.2 to Rs.5L will have to pay 10%. In the same way, those with above Rs.5L will have to pay 20% and those above Rs.10L will have to pay 30%. Continue reading
Will RBI permit realty builders to run banks as Finance Ministry suggests?
Finance Ministry, favoring the realty sector and broking firms said that they should be permitted to run banks. The ministry said that the RBI should permit the real estate firms and broking firms to run banks. Finance Ministry was commenting on the RBI’s plan over giving new bank licenses.
Though Finance Ministry supported and favored the real estate sector and broking firms, it added that there should be absolute ban on gaining exposure in the group companies or entities related to any of the promoters. Continue reading
Residential Sector Thrives Again
Real estate sector will be boosted as the Finance Ministry plans to offer bank loans to the builders who have stalled projects at hand. The decision is expected to be made within a couple of weeks.
Latest RBI data show that the bank credit to the residential sector has grown by mere 12.1 % on year on year basis. This, in fact, is lower than the 15.9 % aggregate growth rate of bank credit. Continue reading
The higher financial stress of the Government makes them think of selling or leasing of the surplus land. This will provide more land for construction in metropolitan cities like Delhi, Kolkata, Mumbai and other such notable cities of India.The decision will boost the real estate growth. Realty firms are sure to cast their hawk’s eye on this land and make the profit out of it. Continue reading
Photo by It is very likely that the Real Estate prices in the country will shoot up further with the Finance Ministry’s decision of not withdrawing 2.5% service tax. This move was proposed by the Urban Development Ministry in the budget of FY10-11.
The budget had earlier proposed this tax on all under-construction projects. And it is common knowledge that eventually the customers will have to bear the burden and not the developers.
The declination came as no less than a shock to the Urban Development Ministry. Its Minister Mr. S Jaipal Reddy argued with the Finance Minister Mr. Pranab Mukherjee in the favor of the move in April this year but it could yield no results evidently.
The ultimate sufferers will be the Indian middle class who already has to bear the burden of inflation in almost all other spheres but also dreams of owing a home of their own!
April 14, 2010
A memorandum has been submitted to the Finance Ministry concerned with the appeal for removal of service tax on housing complexes under construction by CREDAI, Confederation of Real Estate Developers’ Associations of India which is a real estate industry body.
The Chairman of CREDAI, Kumar Gera stated that they have put forth their concerns and suggestions and also discussed the probable impact of the provisions with the Ministry. An understanding of the problem and required corrective steps will be taken is a hope from the government. The list of recommendations was built in consultations with KPMG, its knowledge partner and was submitted to Y G Parande, a Finance Ministry Member (Budget).
According to Gera, the money collected through the imposition of service tax on real estate development will not be big enough; rather it would majorly lead an overall negative sentiment and a net loss of revenue.
In budget 2010, it was announced by Mr. Pranab Mukherjee, the Finance Minister that a tax would be imposed on the housing complexes under construction but later it was clarified by the officials that service tax would be imposed on 33 per cent of total selling price. This was interpreted by the real estate players as a 3.5% price escalation for the buyers.
According to CREDAI, it was an impractical proposal to levy service tax on construction of complex since would lead to government giving preference to the secondary market of completed projects.
The urban development ministry aims to seek a review of the proposal to get the service tax duty on sale of housing projects under construction which had been proposed in budget 2010 from April 1, 2010.
Photo by nancyarora2020The urban development Minister Mr. S Jaipal Reddy said at the national conference on Indian Real Estate “The urban development ministry feels the proposal of service tax needs review. I am recommending the review of the proposal. I think the real estate sector in India is not in pink of health right now and we cannot afford to add pressure on that,” he said, adding that suggestions would be made to the finance minister in the next few days.
The conference on Indian real estate was held by Associated Chambers of Commerce and Industry of India ( ASSOCHAM ) on Friday, March 26.
Realty sector has suffered the most after the global meltdown started in September 2008 and has just started to witness marginal pick up in demand. Real estate players are already pushing the government to withdraw the service tax imposed on the housing sector (at 3.3%, with abatement), as it would dampen the buyers.
“This is not the right time for service tax implementation as the government’s objective is to encourage people to own houses. We have to wait for another month or so to see if the finance ministry listens to our request,” told KP Singh, Chairman, DLF Group.
Mr. Reddy said that the government wants “vertical growth” of cities contrary to urban sprawl due to shortage of land and a more flexible floor-area-ratio (FAR) regime. A high FAR limit will allow more storeys’s to be built in the houses.
He quoted a report from the UN Habitat which showed, by 2050, 1 billion people of India will be living in cities. Reddy said to the reporters “ Urbanization is not only inevitable but also desirable,” but further added that urban development has been a subject of “benign neglect” over the years as the issue fell in the domain of the state governments.”
Another suitable point that has been an issue for real estate companies is the number of clearances one has to take for the beginning of any project. “Today, there are more than 50 agencies from where we have to take our clearances. We have to ensure that the best way forward is to have a single window system as it would not only save time, but also ensure transparency,” said MD, Raheja Developers Ltd, Mr. Navin M Raheja.
“It is very important to have a single window clearance system in real estate sector,” put forward Anil K. Agarwal, Past President of Assocham.
All we have to wait for is the finance minister’s stand.