Statement from Girish Vanvari, Head of Tax, KPMG in India
Budget 2017 sticks to fiscal prudence with a fiscal deficit of 3.2% whilst balancing enhanced spending in several socio economic schemes and different aspects of economic development. There is some cheer for individuals as tax rates for income between 2.5 lakhs to 5 lakhs has been reduced from 10% to 5% . However an additional 10% surcharge has been introduced on income between 50 lakhs and 1 crores which is a dampener for high networth individuals. MSME with turnover upto Rs 50 crores will benefit from lower tax rate of 25% and there are some concessions to boost the real estate sector. The trust of the budget is to enhance the tax base and move towards digitization through several amendments in the act. No change in capital gains tax regime for listed stocks and clarification on non-applicability of indirect transfer rules to FPIs and AIFs will be a big relief to the investors and could trigger an immediate rally on the stock markets. One can argue that the Budget could be more ambitious at the cost of fiscal prudence. However, in global macroeconomic backdrop, the calibration in the Indian economy post demonistation and much awaited GST which is now on anvil, Budget 2017 is stable fine balancing act, with fiscal prudence, directional spending and no surprises on the taxation front which should lead the country to a sustainable growth path.
Neeraj Bansal, Head of Real Estate and Construction, KPMG in India
FM has reduced the holding period for land and building from 3 years to 2 years for long-term capital gains purpose. This would help improve invest ability in properties in comparison to shares and stocks where the period is 1 year.
Union Budget: Real estate grabs the centre stage – Neeraj Bansal , Partner and Head of Real Estate and Construction, KPMG in India
The announcements in Union Budget 2017-18 provided the much necessary push to housing affordability. Host of incentives to propel demand, streamline direct tax related issues, and promoting low-cost housing in both urban and rural regions were announced which were in-line with our expectations.
Among the most important announcement was granting of infrastructure status to affordable housing development – a long pending demand of the sector. It has been complemented by increasing allocation to rural housing programme by more than 50 per cent.
By granting Infrastructure status to affordable housing, the Government acknowledges that affordable housing industry is an important driver of the economy. Affordable housing developers will now be eligible for several Government incentives, subsidies, tax benefits and most importantly institutional funding. The status could also mean that the Government may release land specifically for affordable housing development in central locations of major urban centers in India.
The budget provided limited incentives on personal income tax side for income of upto INR50 lakh. Introduction of surcharge of 10 per cent on income above INR50 lakh is expected to reduce disposable income further. Further, the budget was also silent on incentives to boost REITs, rental housing and commercial real estate asset.
Statement from Neha Punater, Partner and Head of Fintech, KPMG in India
The Govt. has continued the demonetization initiative to promote digital and cashless payments with a slew of initiatives in the budget. It has addressed all the components – from incentivizing the customers and merchants for using BHIM to furnishing of PAN for cash transactions over Rs. 3 lakhs to promoting infrastructure creation by duty exemption on POS machines and iris readers.
The Aadhaar enabled merchant payments would ensure that supply side is also addressed for a digital transaction. We see this a definitive boost for the digital economy.
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