VVat impact do experts see on direct tax code on home buyers and consequently on RE .

Is tax benefit for home loans going avvay ? (Heard from someone but don't knovv if its true)
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  • Originally Posted by puser
    VVat impact do experts see on direct tax code on home buyers and consequently on RE .

    Is tax benefit for home loans going avvay ? (Heard from someone but don't knovv if its true)


    I almost opened a new thread before I came across this one. As per DTC 2011, to be introduced in next budget, Home loan interest will be no more deductible.

    Will it drive away investor from RE market? Typically salary class investor?

    What impact will it have if the demand wanes? Resale or under construction market will have any specific impact?

    As per my understanding DTC Code is still under debate and FM is asking recommendation. Ppl are lobbying for exclusion of RE related provisions. Seeing the way current FM dealt with Service Tax, I am getting doubt-full, that FM will pay heed to those recos. Would like to know experts opinion.

    - Sameer
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  • Let me try to explain with the help of an example..

    Father has 2 Children namely Child1 and Child2.

    Father gives each child Rs 50 to spend. An extra Rs 10 chocolate subsidy will be given if the child used his own Rs. 10 to buy choclates. i.e. Rs 40 + Rs 20 if choclates are bought for Rs 20.

    Child1 loves chocolates and decides that he will use the Rs 20 to buy chocolates. i.e. in affect Child1 gets Rs 60/-

    Child2 decides not to have the chocolate and foregoes the extra Rs 10/- so in effect Child2 gets only Rs 50/-

    Next, father feels that Child2 should not be penalized because he decides not to eat chocolates. At the same time father does not want the chocolate eating Child1 to suffer.

    Father REMOVES THE Chocolate subsidy but gives more Rs.10 extra (MONEY IN HAND) to both Child1 and Child2.

    Child1 is NOT AFFECTED as he still gets Rs 60. (40+20) and can still use Rs 20/- for chocolates and be left with Rs 40/-

    Child2 now gets Rs 60. i.e. Rs 10/- more WHICH GETS HIM LEVEL WITH THE AMOUNT CHILD1 was always getting.

    Now just replace the Chocolate subsidy with housing subsidy. I hope I have explained it correctly with this example. i.e. subsidy will be removed but tax rates will be reduced so net effect for home buyers will be the same as before. Pls correct me if I am wrong.

    VK

    PS: Please assume that chocolates can be bought only in wholesale quantity i.e. Rs 3000/- per 600 slabs. and so it is a comittment of 12-15 years of payment. ;-)
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  • In the story, you can also add a Child3 who did not want to buy chocolate at that time and also had no concrete plan on what to do with the 50Rs.
    Since father was offering a chocolate subsidy, he decided to buy 20Rs chocolate and make his claim on total 60Rs. He kept those chocolates in drawer. Later when father decided to do away with subsidy, the child realized the actual cost of those chocolates lying in the drawer.

    Originally Posted by veeemkay
    Let me try to explain with the help of an example..

    Father has 2 Children namely Child1 and Child2.


    VK

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  • Originally Posted by aditi sharma
    In the story, you can also add a Child3 who did not want to buy chocolate at that time and also had no concrete plan on what to do with the 50Rs.
    Since father was offering a chocolate subsidy, he decided to buy 20Rs chocolate and make his claim on total 60Rs. He kept those chocolates in drawer. Later when father decided to do away with subsidy, the child realized the actual cost of those chocolates lying in the drawer.

    hi ppl lets not miss another important point of DTC recommendations , that apart from home loan tax benifit HRA benifit are also going, so its negative for both owners and rent persons.
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  • Originally Posted by echaos
    hi ppl lets not miss another important point of DTC recommendations , that apart from home loan tax benifit HRA benifit are also going, so its negative for both owners and rent persons.


    I did not know that. I think they are trying to bring the parity. While doing injustice it should be same to all :-)
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  • Right. But who took house on rent just because there were tax benefits ?
    But in buying this encouragement was a significant factor.

    Also there are working couples who own flats each and both claim benefits.

    Originally Posted by echaos
    hi ppl lets not miss another important point of DTC recommendations , that apart from home loan tax benifit HRA benifit are also going, so its negative for both owners and rent persons.
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  • Originally Posted by aditi sharma
    In the story, you can also add a Child3 who did not want to buy chocolate at that time and also had no concrete plan on what to do with the 50Rs.
    Since father was offering a chocolate subsidy, he decided to buy 20Rs chocolate and make his claim on total 60Rs. He kept those chocolates in drawer. Later when father decided to do away with subsidy, the child realized the actual cost of those chocolates lying in the drawer.


    So r u saying he can sell those chocalates kept in drawer and earn more money :)
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  • That might depend upon what Child3 wants to do with that. Buy now-eat latter or Buy now-sell later. Question is Child3 bought chocolates because of the tax benefits even though he did not need it.

    Originally Posted by kothrud_pune
    So r u saying he can sell those chocalates kept in drawer and earn more money :)
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  • Delete Post.. sorry
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  • Does that mean there will be more, Secondhand chocolates in the markets ?
    :bab (6):

    Tax slabs will be substantially increased.
    The main aim of direct tax code is,
    simplify tax structure by reducing subsidies :D&
    Bringing more income under tax net to generate revenew. :bab (45):

    Here is proposed structure

    0 to 1.6 Lakhs 0% Tax
    1.6 to 10 Lakhs 10% Tax
    10 to 25 Lakhs 20% Tax
    Above 25 Lakhs 30% Tax

    For Female - First slab will be upto 1.90 & for senior 2.4
    overall saving under 80 C will be 3 Lakhs

    Happy ? Read below

    All saving instruments will be EET - exempt exempt Tax - So u have to pay tax on maturity including PF

    HRA
    LTA
    Medical
    Leave enchantments
    Housing Interest

    All Taxable .
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  • Originally Posted by hemanshu


    All saving instruments will be EET - exempt exempt Tax - So u have to pay tax on maturity including PF

    HRA
    LTA
    Medical
    Leave enchantments
    Housing Interest

    All Taxable .


    Most people make fraud documents to claim tax benefit under HRA, LTA , medical and Professsional development. So it is good to see that all are going and compensated by higher tax bracket. Abt Housing interest my personal opinion is that as people had bought in past lloking at this benefit of 1.5 lakh goverment should includ it in 3 lakhs saving bracket. So if one want to buy a house and save money he can do so or else he can invest in tax saving schemes.
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  • What happened to DTC ?
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