Think twice as that second home won’t save much tax

TNN | Feb 2, 2017, 06.01 AM IST

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(Representative Image)(Representative Image)
While the Budget has let sellers of immovable property claim long-term capital gains after two years instead of the earlier three, it has discouraged investment in the housing sector for rental income by taking away a benefit provided on buying a second house.

Tax breaks on interest paid on rented homes (whether first or second) have now been capped at Rs 2 lakh a year. So far, the entire payment of interest on home loan taken to buy a house for investment purpose was allowed to be set off from the gross income. The only condition to avail the facility was that the rental income was included in the total income.

In fact, this provision will take away a major avenue to avoid paying taxes by creating assets. At present, the interest cost of a house is around 9% of capital value, while rental income is at best 2% of capital value. Therefore, the investor gets a deduction of almost 7% of capital value from taxable income. If the investor is in 30% tax bracket, the saving is over 2% of capital value each year.

In fact, a senior CA pointed out that this would be a major setback for high-net worth individuals who have invested in real estate. He felt that even though the additional interest -above Rs 2 lakh paid during the year -can be set off in the next eight assessment years, this won’t be of much use as the interest payments would mount every year.

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great article………………………………………………. and news give me some points………………………….Manoj singh Pharshwal

There was some reason for cheer though. The Budget has reduced holding period for property from three years to two years. Now if you sell it after two years, the profit will be taxed at 20% after indexation. Indexation takes into account the inflation during the holding period and accordingly adjusts the purchase price, thereby reducing the tax burden for the seller.

For those who want to sell their ancestral houses, the base year for indexation will now be taken as 2001, instead of 1981. This will inflate the base price for those houses which were purchased earlier. With the increase in base price, the net capital gains will reduce, and so the tax liability will come down. This provision will enable investors to book profit faster.

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source”cnbc”

Think twice as that second home won’t save much tax

TNN | Feb 2, 2017, 06.01 AM IST

7 Comments

(Representative Image)(Representative Image)
While the Budget has let sellers of immovable property claim long-term capital gains after two years instead of the earlier three, it has discouraged investment in the housing sector for rental income by taking away a benefit provided on buying a second house.

Tax breaks on interest paid on rented homes (whether first or second) have now been capped at Rs 2 lakh a year. So far, the entire payment of interest on home loan taken to buy a house for investment purpose was allowed to be set off from the gross income. The only condition to avail the facility was that the rental income was included in the total income.

In fact, this provision will take away a major avenue to avoid paying taxes by creating assets. At present, the interest cost of a house is around 9% of capital value, while rental income is at best 2% of capital value. Therefore, the investor gets a deduction of almost 7% of capital value from taxable income. If the investor is in 30% tax bracket, the saving is over 2% of capital value each year.

In fact, a senior CA pointed out that this would be a major setback for high-net worth individuals who have invested in real estate. He felt that even though the additional interest -above Rs 2 lakh paid during the year -can be set off in the next eight assessment years, this won’t be of much use as the interest payments would mount every year.

Latest Comment

great article………………………………………………. and news give me some points………………………….Manoj singh Pharshwal

There was some reason for cheer though. The Budget has reduced holding period for property from three years to two years. Now if you sell it after two years, the profit will be taxed at 20% after indexation. Indexation takes into account the inflation during the holding period and accordingly adjusts the purchase price, thereby reducing the tax burden for the seller.

For those who want to sell their ancestral houses, the base year for indexation will now be taken as 2001, instead of 1981. This will inflate the base price for those houses which were purchased earlier. With the increase in base price, the net capital gains will reduce, and so the tax liability will come down. This provision will enable investors to book profit faster.

source”cnbc”

Uttar Pradesh developers give mixed reactions over union budget

Representative image.Representative image.
LUCKNOW: Real estate playersand stakeholders have different viewpoints on the union budget. While some welcomed the latest measures announced by the union government to boost the industry, some of them found it lacking. Industry players also highlighted slow execution of government policies in Uttar Pradesh.

Though everybody welcomed the takeaways government offered to builders undertaking affordable projects, they also pointed out how they will have to pay up tax on notional rent on unsold inventory within a year. “The sector has remained extremely weak for three years. More was needed. Focus on just affordable housing is not enough,” said Khalid Masood, joint managing director Shalimar Corp Ltd who dubbed the budget as lacking.

Chief managing director of Paarth Infrabuild Pvt Ltd, PN Mishra said, “Every year sops are announced for affordable housing. But nothing improves on the ground. We have undertaken two affordable projects in Allahabad and Lucknow. Though we have completed the formalities, we are yet to get benefits from government. Government should work on effective execution.”

But CREDAI UP president and chairman of Eldeco group was hopeful. “Very limited number of units below Rs 20 lakh are available in the city at present. A lot of families do not prefer to stay in government schemes. With easy financing to developers doing affordable buildings, we will be able to supply units in the range of Rs 15 lakh to Rs 20 lakh,” said Garg.

A body of a man who could not be identified has been taken out from under the debris. The district magistrate of Kanpur said that as per the statements of labourers who were rescued, there were a total of 50 of them working on the site and going by the statements 26 more could be trapped under the debris

source”cnbc”

TN to add 50,000 acres for industrial land bank

CHENNAI: Facing shortage of space to setup industries, the State Industries Promotion Corporation of Tamilnadu Ltd (SIPCOT) is eyeing on adding 50,000 acres to its land bank including those in the peripheries of Chennai.

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ok…Yuvarajan M

Addressing the gathering on the occasion of a leadership session on “progressive Chennai: advancing success in an evolving market” organised by CREDAI Chennai and JLL here on Saturday, industries department secretary Vikram Kapur said that SIPCOT has allocated 20,000 acres of the available 24,000 acres of land to the industries. “Land has been biggest a constrain and most of the land provided through SIPCOT has already been occupied … We are continuously expanding our land bank and the target is to develop an additional land bank of 50,000 acres some of which will also come in Chennai and peri-urban area because this is where the real industrial activity is happening,” he said.

In a bid to spur industrial growth across the state, the government is developing two major corridors including the Chennai – Kanyakumari corridor. The proposed corridor will comprise of a first-of-its-kind nodes, which will have exclusive planning authorities and Special Purpose Vehicles to provide necessary infrastructure. “It is a new approach, where rather than industries running to various agencies, we will be creating a mechanism for all planning approvals such as masterplans and plan approvals will be given by a dedicated authority,” he said.

source”cnbc”

TCS plans share buyback as Chandrasekaran moves to Tata HQ

TCS’ outgoing MD N ChandrasekaranTCS’ outgoing MD N Chandrasekaran
MUMBAI: Tata Consultancy Services (TCS), the most valuable company within the Tata Group, will consider a share buyback, which, if approved by its board on February 20, will be its first since its listing in 2004. Given the headroom allowed by securities laws, the company could do a buyback ranging between Rs 6,536 crore to Rs 16,340 crore.

TCS’ outgoing MD N Chandrasekaran said that investors had suggested that the company should distribute its excess cash either in the form of dividends or through a share repurchase programme. The software giant has cash and investments of Rs 39,219 crore on its books, which is 8% of its market capitalisation. The buyback plan comes days before Chandrasekaran takes charge as the chairman of TCS’ parent Tata Sons.

“A share buyback is a better substitute to dividends especially for large shareholders, if one takes into account the dividend distribution tax and additional surcharge,” said Mehul Savla, director of Ripple Wave Equity. Tata Sons holds 73% in TCS.

Latest Comment

Looking forward value addition.Jag Mohan

Rules allow a company to buy back shares of up to 10% of its total net worth without shareholders’ approval and up to 25% with shareholders nod. If TCS goes for 10% of its total net worth of Rs 65,360 crore, then it will have to spend Rs 6,536 crore on the buyback programme. And in case it opts for 25% of its consolidated net worth, then it will have to shell out Rs 16,340 crore. At Rs 6,536 crore, it can buy 1.35% of its total equity at current market price of Rs 2,447 and at Rs 16,340 crore, it can buy 3.4% of its total equity.

Public shareholders hold 27% in TCS, of which 22% is held by institutions with LIC being the largest (3.44%). The balance is held by non-institutions and retail shareholders with former Tata Sons chairman Cyrus Mistry holding over 1.14 crore shares, representing over 13% of TCS’ non-institutional public shareholding.

IT services companies are under pressure to return excess cash to shareholders. Last week, Cognizant announced a $3.4-billion share repurchase and dividend payout programme. There is speculation that Infosys may go for a Rs 12,000-crore share repurchase programme. In 2016, Wipro had announced a Rs 2,500-crore share buyback

source”cnbc”

Quit notice to Vijay Mallya has not disrupted India operations: Heineken

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Heineken, the world’s second-largest brewer, said there had not been any disruption to its Indian business or management after partner United Breweries sent the notice to Mallya.Heineken, the world’s second-largest brewer, said there had not been any disruption to its Indian business or … Read More
MUMBAI: United Breweries merely followed a regulatory order in asking chairman Vijay Mallya to step down, Heineken NV, the Indian brewer’s largest shareholder, said in its first comment on the businessman since he got embroiled in a series of cases related to overdue loans.

Heineken, the world’s second-largest brewer, said also there had not been any disruption to its Indian business or management after partner United Breweries sent the notice to Mallya.

About three weeks ago, the Securities and Exchange Board of India banned Mallya from the securities market as well as holding any board or key managerial positions at listed companies. The order also covered some former executives of United Spirits, a company Mallya previously owned and is now controlled by UK’s Diageo. Mallya, according to legal experts, is expected to challenge the Sebi order.

Sebi issued an executive order to Mallya and it was not the will of the shareholders or board of directors, but just a court order that had to be executed, Jean-Francois van Boxmeer, Heineken’s chairman of the executive board, said on an investors call Wednesday.

“It’s for Dr Mallya to react on that if he wants to have a stay on that position. It is entirely in his hands to go with these procedures,” he said. “And, as to the shareholder, their rapport between the two promoters as they are called in the core shareholding, that’s Heineken and the group of Dr Mallya, we still are in a joint venture agreement.”

In a mail sent to Mallya last week, the company said: “In order to comply with the Sebi order and in the absence of any stay or vacation of the said order, the board is compelled to request you to step down from the board of United Breweries with immediate effect.”

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When you have tons of money you can take on even a nation of a billion people ! How unfortunate !!soarhigh

The regulator had also directed United Spirits to provide information on steps taken to recover Rs 1,880.8 crore from Mallya and the companies to which the money was diverted. The funds were allegedly diverted during the period between 2010 and 2013. As per a PwC-UK report, the amount was Rs 655.55 crore, while an E&Y report estimates it at Rs 1,225.24 crore, according to details cited in the order.

Heineken has been hiking its stake in United Breweries, from 37.5% in 2003 to about 43% now by purchasing shares in block trades from the stock market. The Dutch firm, which has the first right of refusal to buy shares owned by Mallya in United Breweries, is also open to a hostile takeover. In 2016, Heineken purchased United Breweries shares from Yes Bank and ECL Finance, with whom Mallya had pledged the shares.

United Breweries, which controls over half the Indian beer market with brands including Kingfisher, posted an 8% decline in sales during last quarter. “A large part of that decrease was due to demonetisation,” the company told investors.

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source”cnbc”

Notes ban to have positive impact on economy: Report

Representative image.Representative image.
NEW DELHI: The government’s demonetisation move has led to widespread adoption of online payment and is expected to have a positive long term impact on the economy, according to a report.

The report titled ‘India: Transforming through radical reforms’ by Assocham and EY observed that improved governance, favourable conditions to conduct business, transparency in government procedures and responsive policy making with an immediate focus on effective implementation of reforms will continue to evolve India into a preferred destination for foreign investment.

“While the pace of India’s radical reforms may vary, the direction is firmly set toward higher growth. The economy will continue to benefit from significant progress in trade, proactive policy actions and robust external buffers,” the report highlighted.

India is set on a growth trajectory that promises all-round development, economic welfare and strong macroeconomic indicators. All these radical reforms are acting as enablers for boosting the domestic environment which in turn is improving the country’s stature globally, it said.

However, it said that the government needs to continuously invest in improving the ease of doing business environment, develop sound infrastructure and ensure availability of trained workforce.

According to the report, combining demonetisation with Digital India and Pradhan Mantri Jan Dhan Yojana will ensure transparency in financial transactions.

“Demonetisation has led to widespread adoption of online payment, and digital wallet options have suddenly gained traction. Overall, the JAM Trinity initiative will spur the growth of payment service providers and telecommunication, ICT and other technology-related sectors, paving the way for digitalisation of the economy,” the report pointed out.

Moreover, it said, the move is expected to have a positive long term impact on the economy through better tax compliance, increase in the tax to GDP ratio and higher tax collections. The ceasing of major proportion of unaccounted currency would reduce the government liabilities and add to its finances.

Top Comment

It is mentioned in the news that online transactions increased! What else a common person could do? If his/her nose is caught behind by bjp, he/she has to breathe from mouth!George Joseph

Besides, the surplus liquidity in the banking system will lower borrowing costs and increase the access to credit.

It also termed demonetisation as a major step aimed at strengthening India’s proposition of becoming a transparent economy by curbing black money, terror financing and fake currency circulating in the economy.

source”cnbc”

Infosys row: Sebi says will not spare anyone if found guilty

File photo of Vishal SikkaFile photo of Vishal Sikka
MUMBAI: Amid the IT giant Infosys coming under the scanner for alleged corporate governance malpractices, Sebichairman on Friday said the regulator will not spare any violations irrespective of whether the entity found guilty is big or small.

“Any input that we receive from any source is taken to its logical end. Sebi does not believe that just because some allegations have been made, it is true,” Sinha told reporters at the international conference of commodity derivatives.

“We have to apply our mind and follow the due process. All I can assure you is that after an investigation if we conclude that something wrong has happened then they will not be spared howsoever big or small they are,” he said without naming any company.

Infosys has become the latest major corporate to attract regulatory attention for alleged corporate governance lapses being played out in public after the Tatas, United Spirits and Ricoh India, among others.

A senior SEBI official had recently told PTI that they are keeping a “close watch” on all the developments with a “special focus” to ensure that minority investors’ interests are safeguarded.

Latest Comment

Very excellent move by SEBI, now real culprits to be punished.RaMa Rajya

While Infosys and its top management led by chief executive Vishal Sikka have put up a brave face saying all was well in the company and denied any misgovernance or any other lapses, there have been reports that the founders of the IT giant are not happy with the current leadership team.

Some former Infosys executives have also raised questions about the way the company is being run currently, as also about the pay packages of some people including severance deals given to a few.

source”cnbc”

Aston Martin targets return to profitability in 2018

Aston Martin CEO Andy Palmer peers down the lines of a display model of a AM-RB 001 ahead of the 2017 Canadian International Autoshow. (Reuters)Aston Martin CEO Andy Palmer peers down the lines of a display model of a AM-RB 001 ahead of the 2017 Canadian… Read More
TORONTO: Aston MartinHoldings Ltd expects a return to profitability in 2018, as the now money-losing luxury automaker plans to boost revenues with renewed versions of its sports cars, chief executive Andy Palmer said on Wednesday.

The British automaker, whose sports cars were popularized by James Bond films, is investing heavily to update existing models and develop several new vehicles through the end of 2019, including its first SUV, and the 2 million pound ($2.5 million) to 3 million pound ($3.7 million) Formula 1-inspired AM-RB 001, the most expensive new car ever built by Aston Martin.

“You’ve got a complete renewal during the course of 2018 of the sports cars,” Palmer told Reuters on the sidelines of the Canadian International Auto Show in Toronto.

Unlike other luxury sports car brands, which are part of mass-volume auto groups and can benefit from economies of scale,

Aston Martin remains independent, Palmer said.

“We have to amortize the R&D (costs) on a small volume,” he said. “That’s what justifies the car being expensive.”

The carbon fiber AM-RB 001, which is being developed with Red Bull Advanced Technologies for expected delivery in 2019, is using Canadian composite specialist Multimatic as a supplier, Palmer said. All 150 cars have been sold, with another 25 to be manufactured as a separate variant for the track.

Palmer said one of Aston Martin’s highest volume models will be its DBX SUV, which when delivered in late 2019 would compete with the Bentayga produced by Bentley Motors Ltd, a division of the Volkswagen Auto Group.

Pickups and SUVs accounted for 59.5 per cent of U.S. auto sales in 2016, up from 55.8 per cent in 2015, and North American appetite has prompted luxury makers such as Rolls Royce and Lamborghini to come out with new SUV models.

Palmer said Aston Martin expects to build between 4,000 to 5,000 SUVs a year.

“We don’t want to go to big volume,” he said. “It’s basically high price, low volume, exclusivity.”

Aston Martin, which is to publish its 2016 financial figures at the end of February, is held by Kuwait’s Tejara and Italy’s Investindustrial. The private equity firms hold an equal voting stake, he said.

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Are you looking for an opportunity to earn 10000 and much more by working online (worldwide) from home, based on digital India initiative. Job profile includes promoting mobile applications on social… Read MoreWork from home

Daimler has a 5 per cent stake in Aston Martin in return for access to certain technologies for connected and autonomous cars

source”cnbc”

SBI, associate banks surge after Cabinet okays merger

NEW DELHI: Shares of SBI and its associates rose sharply by as much as 13.5 per cent today after the Cabinet approved their merger, a step aimed at strengthening the sector through consolidation of public banks.

The scrip of State Bank of Mysore soared 13.54 per cent, State Bank of Bikaner and Jaipur zoomed 10.86 per cent, State Bank of Travancore jumped 10.54 per cent while SBI gained 3.10 per cent on BSE.

Seeking to create a global-sized bank, the Cabinet yesterday gave the go-ahead to the merger plan of SBI and its five associates.

However, no decision was taken on the proposal to merge the Bharatiya Mahila Bank with SBI.

Latest Comment

Excellent news for banks. Now time to merge all small and loss making banks into BOB and PNB for cost cutting.RaMa Rajya

The merger of associate banks is likely to result in recurring savings, estimated at more than Rs 1,000 crore in the first year, through a combination of enhanced operational efficiency and reduced cost of funds, an official statement said.

The two unlisted associate banks which will be merged with SBI are State Bank of Patiala (SBP) and State Bank of Hyderabad (SBH).

source”cnbc”