Union Budget 2021: Enhance tax benefit in interest on housing loan to Rs 3 lakh from current Rs 2 lakh

-

The Union Budget comes with a lot of expectations, especially amidst the recovery from the pandemic. We expect that the government’s agenda of ‘Housing for All’ will see a major push through this Budget as well.

As a Housing Finance Company (HFC) we also expect announcements which will enhance/ renew of prospective buyers towards owning a house and further propels investments in real estate as an asset class. Needless to say the real estate sector, along with manufacturing and services, is also a huge employment generator, and any positive activity in this sector aids the overall buoyancy in the economy.

We feel, keeping in mind the real estate price inflation over the last decade or so, as a first step, the government can consider enhancement in a tax benefit for interest in housing loan to Rs 3 lakh from the current levels of Rs 2 lakh. The limit can be higher up to Rs 4-5 lakh in metro locations, which will be in line with the real estate price difference which exists between metros and other major cities.

Also, the enhancement in 80C benefits especially with respect to limits for housing loan principal repayment by retail borrowers would be beneficial. The introduction of loss on housing property should be revisited and the limits on the same can be enhanced as well. This would encourage more end investments in the sector.

The initiative should be taken towards liquidity enhancement for small HFCs as well. Schemes/measures like Targeted Long Term Repo Operations or TLTRO and Partial Credit Guarantee or PCG etc., which have seen considerable success over the last few months, should be a part of business and be used by the regulator whenever there is an inherent need in system for the same. Also some kind of SOPs should be given to encourage mutual funds to move back into the debt capital markets so they can invest in long tenor bonds of investment-grade companies.

In the medium to long-term, the government may look at easing of External Commercial Borrowing (ECB) guidelines for HFCs. The investment concentration/group exposure limits etc. can be looked upon with a view to facilitating easier foreign currency borrowing for the sector.

In turn, this will ease the volatility in the domestic real estate markets. On the other hand, encouragement should be given to insurance funds/pension funds to invest in long term debt issuance of HFCs. This will help both parties on Asset Liability Management as HFCs look for long term debt and pension/insurance funds need long term debt investment avenues.

Introduction of housing bonds is another avenue which the government may look at where investment by retail investors is allowed. The finance minister may consider in granting special status to HFCs, at par with the banking sector. This will help in smoothening of any kind of Asset Liability Management mismatch for HFCs who are engaged in financing long tenor retail assets.

The thrust should be given to the initiative taken by the Prime Minister for the housing sector, which is ‘Housing for All’.

Overall, there are initiatives for both HFCs and the end-consumers which are expected, and we do hope that the Union Finance Minister Nirmala Sitharaman will look at the real estate sector favourably.

The writer MD and CEO, Shriram Housing Finance



from Firstpost India Latest News https://ift.tt/39vYikS
Ravi Venkat

Comments

Post a Comment

Popular posts from this blog

Both COVID-19 vaccine doses needed for good protection against B16172 variant

-
It’s been a concerning few weeks in the UK, with the B16172 variant first taking hold and then spreading to become dominant. This more infectious form of the virus, initially identified in India, is what we’re now going to have to live with – unless it is out-competed by another variant in the future. Worryingly, experts had predicted that B16172 might be able to escape some of the effects of vaccines, which if true would threaten to derail the UK’s plans to finish lifting restrictions from the end of June. However, Public Health England (PHE) has looked at the ability of various variants to evade immunity and says that the UK’s vaccines remain effective against the variants circulating, including B16172. On the surface, this looks like good news. But delve a bit deeper, and things get more complicated, says Paul Hunter, professor of medicine at the University of East Anglia. PHE’s research found a little drop-off in protection against B16172 among people who were fully vaccinated.
Read more

New coronavirus variant emerge in India: How should our COVID response change?

-
Image
After genome sequencing of over 10,000 COVID-19 cases in India, researchers have discovered a new variant with two new mutations which may be better at evading the immune system. In 15-20 percent of samples from the Indian state of Maharashtra (the state accounting for 62 percent of cases in the country) a new, double mutation in key areas of the virus has been detected. These are now known as the E484Q and L452R mutations. What makes the variant different? Both these mutations are concerning because they are located in a key portion of the virus – the spike protein – that it uses to penetrate human cells. Spike proteins attach via a “receptor binding domain”, meaning the virus can attach to receptors in our cells. These new mutations include changes to the spike protein that make it a “better fit” for human cells. This means the virus can gain entry more easily and multiply faster. Given what we have seen with other similar mutations , it might also make it harder for our immu
Read more

Aditya L1 Mission: Spacecraft is nearing its final phase, says ISRO chief

-
Aditya L1 spacecraft is nearing its final phase, and manoeuvres to enter the L1 point are expected to be completed by January 7, 2024, according to ISRO Chairman S Somanath. “Aditya is on the way. I think it has reached almost its final phase,” the ISRO chief told PTI on the sidelines of an event organised at VSSC to commemorate the 60th year of the First Sounding Rocket Launch. Aditya L1, India’s first space-based mission to study the Sun, was successfully launched on September 2 from the Satish Dhawan Space Centre (SDSC) in Sriharikota. The spacecraft, after travelling about 1.5 million km from Earth over 125 days, is expected to be placed in a Halo orbit around the Lagrangian point L1, considered closest to the Sun. He said that the last preparations for the spacecraft’s entry into the L1 point are currently underway incrementally.”Possibly by January 7th, the final manoeuvres will be done for entering into the L1 point,” Somanath added. Among other tasks, it will capture and tr
Read more