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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.

National

Ravindra Chavan, Trusted Lieutenant Of Maharashtra CM Devendra Fadnavis, Appointed BJP State Unit President

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Mumbai: Ravindra Chavan, known as a trusted lieutenant of Maharashtra Chief Minister Devendra Fadnavis, will take over as BJP’s state unit president on Tuesday.

The incumbent, Revenue Minister Chandrashekhar Bawankule, will hand over charge at a party conclave in Mumbai. The mantle is being handed to Chavan, whose grassroots planning ensured BJP’s impressive electoral performance in Thane and the Konkan belt, with an eye on the coming elections to the local bodies, according to party sources.

Chavan was the only candidate who filed his nomination papers on Monday at BJP state headquarters in the presence of Fadnavis, Bawankule and the party’s Maharashtra in-charge Arun Singh. Union minister Kiren Rijiju was present as the central observer.

Chavan represents Dombivali for the fourth term in the Assembly. He was a member of the Fadnavis cabinet between 2014 and 2019 and the Eknath Shinde-led government from 2022 to 2024. There was speculation of his elevation to the key party post started when he was denied a Cabinet berth after last year’s Assembly elections. He has been officiating as the working president of the state unit for the last few months.

The BJP is eyeing maximum number of municipal bodies in the Mumbai Metropolitan Region (MMR) comprising 8 municipal corporations. With the elevation of Chavan, known for his aggressive politics, BJP seems to be sending out a message to deputy CM Eknath Shinde-led Shiv Sena, which is likely to ask for lion’s share of seats for the civic polls. As an experienced leader, Chavan will shoulder his responsibilities with vigour and strength, Fadnavis asserted.

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National

Hyderabad Chemical Factory Blast: Death Toll Rises To 32 After 15 Succumb Overnight

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Hyderabad: The death toll in the explosion in a pharmaceutical unit at Pashamylaram near Hyderabad rose sharply to 32 on Tuesday, with about 15 injured succumbing at hospitals overnight.

The death toll in the worst industrial disaster in Telangana may go up further as the rescue workers continued searching for the bodies in the debris of a three-storey building, which collapsed under the impact of the blast.

A massive explosion had rocked Sigachi Industries Limited’s pharmaceutical factory at Pashamylaram industrial area in Sangareddy district, about 50 km from Hyderabad, on Monday morning.

The explosion in the Microcrystalline Cellulose (MCC) drying unit also left 35 workers injured. The condition of 11 of them is stated to be critical.

According to officials, 27 workers were still missing. They were feared trapped under the debris.

Personnel of the State Disaster Response Force (SDRF), Hyderabad Disaster Response and Asset Protection Agency (HYDRAA), Revenue and police continued clearing debris.

The majority of the victims were migrant workers from states like Bihar, Uttar Pradesh and Odisha.

As many as 108 workers were at the factory at the time of the blast, which could be heard about five km away. The explosion triggered a huge fire, and 15 fire engines were used to douse the flames.

According to eye-witnesses, such was the impact of the explosion that workers were tossed in the air and fell several meters away.

As the bodies of some victims were blown to pieces or charred beyond recognition, the authorities were conducting DNA tests to establish their identity.

Chief Minister A. Revanth Reddy will be visiting the accident site on Tuesday. He will also call on the injured at a government hospital.

Health Minister Damodar Raja Narasimha told media persons at the spot on Monday that the cause of the explosion was not yet known. The company, which is 40-45 years old, manufactures Microcrystalline Cellulose, he said.

Labour Minister G. Vivek said prima facie it was not a reactor blast. Some problem in the air dryer system is believed to have resulted in the explosion and fire.

The state government appointed a high-powered committee to probe the disaster and its underlying causes.

The committer comprises the Chief Secretary, Special Chief Secretary (Disaster Management), Principal Secretary (Labour), Principal Secretary (Health) and Additional DGP (Fire Services).

According to the Chief Minister’s Office, the panel would also make recommendations to prevent the recurrence of such accidents.

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National

Maha govt tables bill to set up Gadchiroli district mining authority

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Mumbai, June 30: The Maharashtra government on Monday tabled the bill for the establishment of the 16-member Gadchiroli District Mining Authority for the coordination and supervision of orderly and rapid development of the mineral-bearing area and execution of plans and projects.

The authority will be headed by Chief Minister Devendra Fadnavis, who is also the Gadchiroli district guardian minister. The government’s move is important as it hopes to finish the Left Wing Extremism (LWE) and develop Gadchiroli as the next steel city of India.

The district is endowed with abundant minerals such as iron ore, hematite, magnetite, BHQ, limestone, Dolomites and coal, which are used as raw materials for various manufacturing industries.

Further, Gadchiroli district, which is rich in iron ore, has the potential to be developed as a hub for mineral-based industries, especially the steel industry, said the bill.

“Currently, the absence of an integrated administrative mechanism hampers the swift execution of the mining project. Hence a need was felt for the establishment of a unified authority comprising of certain ministers and secretaries of the relevant departments under the chairmanship of the Chief Minister to expedite mining approvals and foster the growth of mineral based industries such as steel and cement, thereby accelerating the holistic development of the Gadchiroli district and consequently of the state,” said the bill.

It pointed out that the authority will act as a catalyst in speeding up the process of operationalisation of approved mining leases, and will also generate employment in the district and boost the revenue of the state.

According to the bill, the Mines and Minerals (Development and Regulation) Act, 1957, and rules framed thereunder govern the development and regulation of mines and minerals. The major mineral blocks are auctioned following the Mineral (Auction) Rules, 2015. The mining concession holder is required to obtain various clearances and no-objection certificates from various departments and district officers of the government and local authorities within the timelines prescribed in the rules.

If the bidder fails to meet the prescribed timeline, the alloyed major mineral blocks will have to be auctioned again.

The Chief Minister last week at the industry conference said, “Gadchiroli 10 years ago was zero industrial area, nobody thought that it would become an Industrial magnet. Due to a slew of policies, Gadchiroli is becoming a new steel city of India to produce one-third of India’s steel that will change the entire outlook of the district.”

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