Union Budget 2016-17: Expectations in the Housing Sector
Updated on December 5, 20183 mins read
So are you all set for the February 29th?! – THE OSCARS ARE COMING! Well, before you enjoy the glitz and glamour of Oscars, there is another important event due the same morning. Our finance minister Mr.Arun Jaitely will present the Union Budget 2016. So what’s in store this year? The consensus is that the budget will continue to reflect Government’s emphasis on growth like last year. Through changes in tax slabs, we are likely to see an increase in savings of individuals. We can also expect positive developments in the areas of affordable housing, health care and education sector. Tax breaks and health care benefits are expected to be enhanced for senior citizens too. Here’s a quick look at areas that affect you, Income Tax This year the threshold limit for tax exemption is likely to be raised to Rs 3 lakhs pa from the present Rs 2.5 lakhs. Additionally, investible limit under section 80C is expected to be further enhanced. This should directly increase the amount of savings in your hand Read more about the current tax benefits of a home loan Fixed deposits, which have not been very popular tax saving investment so far, may get a boost this budget season. Currently you need to lock your funds for a 5 year term to get any tax benefit from a fixed deposit investment. However, banks are recommending that this term be brought down to 1 year only. This should encourage more individuals to save through fixed deposits and increase liquidity in the banking system. You may also see an increase in the tax saving from medical expenses. Currently individuals can get tax relief for up to Rs 15000 on medical expenses in a year. Health care industry is also calling to extend this tax rebate to non-salaried tax payers too. The government is also likely to reintroduce infrastructure bonds U/S80C. The eligible limit may be increased to Rs 50,000 this time around. Separately, to encourage more individuals to file returns online, the process may be further simplified. The government is also taking measure to expedite income tax filing and refund processes. Bank Loans This year the Government will infuse Rs 25000 crore into revival of banks. This is round II of the total planned infusion of Rs 70,000 crore. However, the banks actually need a total of Rs 1.8 lakh crore. To cover this gap, the government may announce further relief and rebates to public sector banks. Such cuts, if any, would be passed on to you, the consumer. For now, the RBI has kept its rates unchanged till budget 2016 is announced. Real Estate and Housing In light of prevailing environment in the housing sector, some pragmatic steps are expected to support the individual. Currently, you can claim tax deduction on the loan interest paid during construction of a house, in equal installments after possession. If this period of construction takes longer than 3 years, the eligible amount is limited to Rs 30,000 per year. But the fact is, home owners are constantly facing delays in construction and possession these days. There is a possibility that the allowed construction tenure is increased to 5 years in this budget. You could also see an increase in amount eligible U/S 80C and 24B on account of interest and principle paid annually. If you have a let out property, this would translate to higher yield on investment. Affordable Housing The ambitious ‘affordable housing for all’ project was approved by Cabinet in September 2015. The government may now announce support to first time buyers and developers to boost this project in a big way. Due to the scale of this project, a solid public private partnership will be essential. We could therefore see some action in this area as promised by the Government. On the whole, a growth oriented budget is definitely expected this year. You may not see game changing numbers, but you could definitely expect small changes that will increase savings in your hand.
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