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Union Budget 2022: Tax rebates in Budget for realty vital for salaried class

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Currently, one-third of India’s population reside in cities and it is estimated to go up to 50 per cent by 2030. There is a steady rise in the number of households with a shift towards nuclear families and increased urbanisation.

The 66 per cent young population – below 35 years of age, are emerging as young millennial borrowers of home-loans. It is also true that home-loans market is driven by young borrowers within the age group of 26-35 years – about 25 per cent and also by people in the age group of 36-45 years – about 28 per cent. These are all active home-loan audience and jointly account for 53 per cent of annual originations.

The average ticket size of a home-loan of young borrowers has continued to increase over the last 5 years, with a CAGR of 6.2 per cent. The ticket size continues to increase more for women than men. The cumulative active home-loan base of these borrowers has seen continuous growth over the last 3 years at a CAGR of 3.5 per cent.

These young borrowers have been the reason for change in the home-loan market.

Within the affordable segment, volume growth in home-loans of Rs 15-35 lakh, over the last 4-5 years, indicate shifting preferences of buyers towards higher ticket sizes. Rural Housing demand for mid-range and higher ticket sizes has continued to increase over the last 5 years too. Share of annual originations (volume) of Rs 35-75 lakh ticket size has increased by 4 per cent in the last 5 years. Share of annual originations of Rs 75 lakh plus ticket size has increased from 0.37 per cent to 0.87 per cent in the last 5 years.

Share of annual originations of Rs 15 lakh ticket size has declined over the last 5 years, largely due to falling demand for very small ticket size segment of Rs 2 lakh.

The dearth of disposable income has been a deterrent factor for salaried class towards taking home-loan and buying real-estate. Since the input cost in real-estate has increased the rates, the salaried class is left with no other option but to approach for home-loans from financial institutions. Interestingly, the tenure of repayment of home-loan is fluctuating between 11-30 years.

There is also a deterrent factor for salaried class in home-loans and EMIs. The EMIs are no more supportive since the financial institutions first draw larger part of interest in the EMIs and principal component is kept less in more than first 50 per cent of the EMIs. As the EMIs near completion, the interest component becomes negligible and principal component is much higher.

Even if the buyer has the provision of pre-payment of home-loan, he ends up paying the larger portion of principal amount rather than saving on the interest. Further, the financial institutions also levy heavy fees on pre-closure of loans. In case the buyer opts for higher tenure for loan repayment, it then makes it difficult for the buyer to invest in second property.

One question that has been asked frequently is – “If the principal and interest amount are predefined, why the EMIs can’t have equal amount throughout the tenure.”

Coming to tax benefit, repayment of principal amount in a home-loan qualifies for deduction under section 80C, which has an upper limit of Rs 1.50 lakh per annum. Since the same section – 80C, accounts a number of other investments including PF, PPF and life insurance policies etc, it becomes impossible for a buyer to take advantage of any benefit out of this section.

Buyers are looking forward to increase in this limit in Union Budget-2022 since this limit has not been increased in last many years.

On the tax benefit for interest payment, since under section 20(b) of the Income Tax Act, there is a cap of Rs 2 lakh per annum on the interest part of the home-loan, home-loans being larger in size, the buyers are unable to take much benefit of the same too. To extend tax benefit to the buyers the government has also added few sub-sections 80EE, 80EEA under the Income Tax Act but the volume of loan is not allowing buyers to gain desired additional benefits out of these sub-sections.

What perhaps needed in the Union Budget 2022 is to bring dynamic changes in the income-tax slabs and increase the rebates under section 80C, 80EE, 80EEA and 24(b) of the Income Tax Act.

One of the greatest philanthropists Andrew Carnegie said – “Ninety percent of all millionaires become so through owning real-estate.” Andrew Carnegie is one of the five people who built America, the other four being Cornelius Vanderbilt, John D. Rockefeller, J.P. Morgan, and Henry Ford. Harv Eker, an author and businessman, known for his theories on wealth and motivation said – “Don’t wait to buy ‘real-estate’, buy real-estate and wait”. These two statements said all about owning real-estate and what it could mean to a buyer.

Globally, investment in real-estate is directly related to the future of a buyer and also growth of the economy, and so be in India.

International

Striking Iranian regime targets with unprecedented force: Israel Defence Minister

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New Delhi, June 23: Israel’s Defence Minister Israel Katz announced Monday that the Israel Defence Forces (IDF) are currently striking with “unprecedented force” regime targets and governmental repression bodies in the heart of Tehran.

“In accordance with the directives of Prime Minister Benjamin Netanyahu and myself, the IDF is now attacking with unprecedented force regime targets and government repression bodies in the heart of Tehran, including the Basij headquarters, Evin prison for political prisoners and regime opponents, the ‘Israel Destruction’ clock in Palestine Square, the Revolutionary Guards’ internal security headquarters, the ideology headquarters, and other regime targets,” Katz posted on X.

He added, “For every shot fired at the Israeli home front, the Iranian dictator will be punished. The attacks will continue with full force. We will keep acting to protect the home front and defeat the enemy until all war goals are achieved.”

Meanwhile, Iran’s Supreme Leader Ayatollah Ali Khamenei on Monday issued a stern warning in his first reaction following US strikes on Iranian nuclear sites.

“The Zionist enemy has made a big mistake, committed a big crime; it must be punished, and it is being punished right now,” Khamenei said on X, calling the attacks “a big crime.”

The US strikes came after Israeli attacks on June 13 that targetted various locations in Iran, including nuclear and military sites, resulting in the deaths of senior commanders and nuclear scientists.

In response, Iran also launched missile and drone strikes on Israel.

Earlier that day, Israeli Prime Minister Benjamin Netanyahu reiterated the country’s determination to press on with its operations.

“Israel will continue to operate at full tilt in both Iran and Gaza,” he said, adding, “We will not stop this historic operation before we achieve our goals.”

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International

Israel makes new raids on Iran after intercepting missile

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Jerusalem, June 23: Israel conducted a new wave of airstrikes on Iran early Monday, shortly after intercepting a missile fired from Iran, said the Israeli military.

The Israeli Air Force targetted what it described as “military infrastructure sites” in Iran’s Kermanshah province, striking surface-to-surface missile launch and storage facilities, the military said in a statement. More than 15 warplanes participated in the operation.

The strikes came shortly after Iran fired a missile at Israel before dawn and triggered air raid sirens across much of the country. The Israeli military said the missile was shot down, causing no casualties or damage.

The Iranian attack followed US President Donald Trump’s suggestion of a possible regime change in Iran, as US bombers and submarines carried out heavy strikes on Iranian nuclear facilities, Xinhua news agency reported.

Earlier in the day, Iran’s Supreme Leader Ayatollah Ali Khamenei, in his first reaction following the US strikes on Iranian nuclear sites, said that the punishment for Israel, referred to as the “Zionist enemy,” will continue.

Calling the attacks “a big crime,” Khamenei warned of retaliation.

Talking to X, he stated, “The punishment continues. The Zionist enemy has made a big mistake, committed a big crime; it must be punished, and it is being punished; it is being punished right now.”

The US strikes followed Israeli attacks launched on June 13 on various targets in Iran, including nuclear and military sites, killing several senior commanders, nuclear scientists, and civilians, Xinhua news agency reported.

Iran has retaliated with missile and drone strikes on Israel.

Earlier on Sunday, Israeli Prime Minister Benjamin Netanyahu affirmed that Israel would press ahead with its operations. “Israel will continue to operate at full tilt in both Iran and Gaza,” he said, vowing not to be “dragged into a war of attrition.”

“We will not stop this historic operation before we achieve our goals,” Netanyahu stated.

Meanwhile, several reports cited that, a day after US strikes on Iran’s nuclear facilities, the Iranian parliament voted in support of closing the Strait of Hormuz, one of the world’s most critical oil transit chokepoints. Any final decision on retaliation, however, will rest with the country’s Supreme National Security Council..

The US strikes on three Iranian nuclear sites — dubbed “Operation Midnight Hammer” – in Isfahan, Fordow, and Natanz mark the first direct involvement of America in the escalating crisis between Iran and Israel.

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International

Iran executes man accused of spying for Israel

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Tehran, June 23: Iran on Monday executed a man found to be guilty of spying for the Israeli intelligence service, the judiciary of the Islamic Republic reported.

“Mohammad Amin Mahdavi Shayesteh was hanged this morning for intelligence cooperation with the Zionist regime,” stated the judiciary of Iran. (Zionist regime is the term used by Iran for Israel)

Shayesteh was arrested in 2023 for having alleged links to Mossad, Israel’s intelligence agency.

This comes as tensions continue to escalate between Iran and Israel.

Earlier also, on June 14, the Iranian authorities executed a man accused of espionage for Mossad.

“Israeli Mossad spy executed after full criminal trial, the verdict being upheld by Iran’s Supreme Court,” reported Iran’s Mehr news agency.

According to reports, Esmail Fekri was arrested in December 2023 during a complex intelligence operation conducted by the Iranian security agencies.

The execution comes at a time when the war between the two countries continues to intensify and has drawn global attention for threatening the peace of the entire West Asia, a region already facing massive geopolitical turbulence.

Not much information about Fakhri’s arrest, trial proceedings, or specific charges has been revealed, as cases dealing with espionage rarely provide full details, given the sensitivities attached to it.

The Mizan news agency of the Iranian judiciary reported that Fekri sought to send Iran’s classified and sensitive information to Mossad in return for money.

Iran, in late May, had also announced the execution of another individual, identified as Pedram Madani, on the conviction of spying for Israel.

The Iranian media claimed on Sunday that the police in Alborz province in the west of Tehran had arrested two people suspected of having links to Mossad. Later in the day, Israel said it had also arrested two citizens suspected of working for Iran’s intelligence services.

These cases reflect ongoing tensions between Iran and Israeli intelligence agencies, which have been engaged in covert intelligence and counterintelligence operations and have dealt a heavy blow to each other via covert operations.

The two intelligence agencies are engaged in a tit-for-tat campaign combining classic espionage, sabotage, aerial strikes and other covert assassinations.

Several reports claimed that Israeli spies were already on the ground and smuggling weapons into the hostile territory, much before the launch of airstrikes on Tehran.

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