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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.

Business

Adani Green Energy expands battery storage capacity to 6.63 GWh in just 14 months

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Ahmedabad, Oct 1: Adani Green Energy Ltd (AGEL) on Thursday said it has expanded its operational Battery Energy Storage System (BESS) capacity to 6.63 gigawatt-hours (GWh) at Khavda, Gujarat, from 3.55 GWh in June 2026.

India’s largest renewable energy company now accounts for more than 50 per cent of the country’s operational BESS capacity of about 12.6 GWh.

“Reaching 6.63 GWh of operational battery storage in just 14 months is a significant milestone for AGEL and India’s clean energy transition. At this scale, storage can make renewable power firmer, more reliable and dispatchable when the grid needs it,” said Sagar Adani, Executive Director, Adani Green Energy.

“As India’s power demand grows, we will continue to scale energy storage solutions, both battery and pumped storage, to support a more resilient, lower-carbon grid,” he noted.

The 6.63 GWh BESS can store enough clean energy to power around two million homes a day, and support peak electricity demand of cities like Nagpur, Patna or Vizag for several hours.

This BESS capacity at Khavda is equivalent to battery storage capacity of more than 150,000 mid-sized EVs and can store enough energy daily to meet almost twice the Delhi Metro’s estimated daily electricity requirement, underscoring the unprecedented scale of the installation.

The scale-up to 6.63 GWh strengthens the integration of renewable energy into the grid by enabling clean power to be stored and dispatched when required, said the company.

This milestone also consolidates Khavda’s position as the world’s largest operational battery energy storage installation at a single location.

The BESS is integrated with AGEL’s renewable energy (RE) development at Khavda, where the company is developing a 30 GW RE plant across 538 square kms of barren land.

The BESS uses lithium-ion battery technology, integrated with an Energy Management Systems (EMS) and automated telemetry to manage charging and discharging, optimise system performance and support grid services. Battery storage can improve grid stability, manage peak demand, reduce energy curtailment, and enable renewable power to be delivered when required.

AGEL said it is on track to add over 10 GWh of BESS capacity in FY 2026-27 and is targeting 50 GWh of storage capacity over the next 5 years.

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Sensex, Nifty open lower amid continued FII selling; auto, cement shares drag

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Mumbai, Oct 1: Domestic equity benchmarks opened lower on Thursday amid continued foreign fund outflows with auto and cement stocks leading sectoral losses.

Sensex opened at 72,192.89, down 287.39 points or 0.39 per cent. Nifty began trading session declining 76.75 points or 0.34 per cent to 22,543.70.

Among sectoral indices, Nifty Auto, Nifty Cement, Nifty Realty, Nifty Media and Nifty Healthcare were top laggards, plunging up to 2.76 per cent in early deals. Energy, metal and pharma indices also traded sharply lower, falling between 0.86 per cent and 0.95 per cent.

On the other hand, Nifty IT rose more than 1 per cent, while Nifty Private Bank also advanced 0.60 per cent.

The market remained under pressure after foreign institutional investors (FIIs) continued their selling streak.

On Wednesday, foreign institutional investors (FIIs) were net sellers for the fifth consecutive session and offloaded equities worth more than Rs 10,148 crore, according to provisional data.

Meanwhile, domestic institutional investors (DIIs) continued to provide support, purchasing equities worth Rs 11,271 crore during the session.

Analysts said sustained FII selling, coupled with rising US bond yields, could keep large-cap equities under pressure in the near term. FIIs sold equities worth Rs 45,536 crore through exchanges in September, while investing Rs 9,676 crore through the primary market, they added.

The experts further noted that the near-term market structure remains sideways to bearish, with immediate support for the Nifty placed around 22,500-22,550 and resistance at 22,800-22,900.

They said a sustained move above the resistance zone could improve sentiment, while a break below the support level may keep selling pressure intact.

Analysts also pointed to crude oil prices as a key factor to watch, noting that a decline in Brent crude below $98 a barrel could provide some relief to the market.

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Sensex, Nifty open flat tracking mixed global signals

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Mumbai, Sep 30: Domestic equity benchmarks opened flat on Wednesday tracking mixed global cues as investors remained cautious after foreign investors extended their selling streak to a fourth straight session.

Nifty opened at 22,665, down about 50 points or 0.23 per cent. Sensex began trading at 72,441.15, lower by 87.92 points or 0.12 per cent.

In early trade, the Nifty MidSmall IT & Telecom index was top sectoral gainer which rose more than 1 per cent.

Meanwhile, Nifty PSU Bank, Nifty Chemicals, Nifty Oil & Gas, Nifty Cement and Nifty Media also jumped up to 1 per cent.

In contrast, metal stocks were among the laggards with Nifty Metal falling 0.42 per cent. Healthcare and pharmaceutical indices were also marginally lower.

Market experts said elevated US bond yields were contributing to foreign investor selling, while the recent correction had created attractive valuations in parts of the Indian market.

“From the Indian investors’ perspective, this sharp correction in the market presents an opportunity. Largecaps with good growth prospects have reached attractive valuations,” they said.

Experts also noted that a correction in crude oil prices could trigger a market rally with largecap market leaders potentially leading such a move.

Technical analysts said the market could attempt to stabilise after its recent decline, with buying emerging around key technical levels.

Nifty had formed a hammer candle in the previous session, indicating buying interest at lower levels, while strength in select heavyweight stocks helped limit the decline.

The near-term structure has improved towards sideways to mildly bullish following the reversal from 22,600.

Immediate support is seen at 22,650-22,700, while resistance is placed at 22,950-23,000, according to the experts.

On Tuesday, foreign institutional investors (FIIs) extended their selling streak to a fourth consecutive session, offloading equities worth nearly Rs 10,000 crore, according to provisional data.

Domestic institutional investors (DIIs) provided support, buying equities worth nearly Rs 7,000 crore.

In addition, Asian markets were broadly positive in early hours despite a mildly weaker Wall Street session, while investors remained focused on upcoming US economic data and global market trends for further direction.

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