Hello and welcome to the chat with Suresh Sadagopan, Founder & Principal Financial Planner, Ladder7 Financial Advisories on Budget impact and financial planning
True. But since GST is on the way and the Service tax is already 15%, the move to 18% ( atleast in most cases ) would not be a major jump. He has probably not increased it to 18% now because GST is round the corner.
There is no direct benefit arising out of the budget itself. However, some of the measures directed at the banks could positively impact the interest rates and they could come down.
One of the direct benefits is that you may sell the real estate after a period of two years instead of three years ( in future ) and you will be subject to longterm capital gain treatment.
The personal income tax measures should be net positive for the government as in the higher slabs they would get 10% surcharge ( Rs.50 L - Rs.1 Crore ) & 15% surcharge above rs.1 Crore. They would have done that calculation before introducing the benefit for those in the lower tax brackets. So, on one hand a mass of people will get benefitted and on the other hand a much smaller set of people will compensate for the loss.
You are asking the question that you should be posing to the finance minister! But, what the government is probably attempting to do is a mix of carrot and stick approach and also nudging the citizens along the digital payment mechanisms by making them easy to use and seamless. Then the government is also now vocal about the fact that they are doing data analytics and will be able to find people whose spending pattern do not match with their declared income.infact this last thing should be a big deterrent as most purchases are being captured today and government can easily piece together the data regarding a person and initiate any action it may deem appropriate. Due to all these, there would be more incentive for compliance.
This is actually a curious move. This will allow people to exit with a lesser holding period. But, that is hardly the prescription needed today. There is too much supply, both with the investors and with the builders and too few buyers. The problem is that one is not able to exit at all. That problem will not be addressed by this change of capital gains from three to two years. My assessment is that, this will have very little impact on the real estate sector for now.
There are measures that they are contemplating - like Rs.3 L limit for cash transactions, Rs.2,000 limit for cash donations etc. Plus there is a push towards digital payments. All these would make the transactions transparent and black money will find hard to be there. Government is also intent on using Big data analytics to ferret out data about those who have black money based on their spending patterns. Plus, govt is trying to bring in regulations to ensure that people cannot borrow money and flee abroad. These are some of the measures. These and many more to come together would address the black money issue. Having said this, our people are innovative in finding solutions to intractable problems. The government need to constantly be on the run to catch such offenders.
No. The general belief was that Capital gains/ STT were going to change for the worse! Probably, that was a leak which spooks people and when we find that there is no change, we tend to see it as positive. It is a mind game. It looks like we have been a party to it!
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MODERATOR:
Hello and welcome to the chat with Suresh Sadagopan, Founder & Principal Financial Planner, Ladder7 Financial Advisories on Budget impact and financial planning
SURESH SADAGOPAN:
Hello everyone!
SHRADDHA MENON
With FM reducing the income tax for 2.5-5 lk bracket to 5%, what will be the impact on 5-10 lk bracket?
SURESH SADAGOPAN
For those in the Rs.5 - Rs.10 Lakh bracket, the income tax reduction would be to the tune of Rs.12,500.
JOSE JACOB
FM has not increased any service tax as of now, won't the rise in tax be difficult to incorporate suddenly during GST?
SURESH SADAGOPAN
True. But since GST is on the way and the Service tax is already 15%, the move to 18% ( atleast in most cases ) would not be a major jump. He has probably not increased it to 18% now because GST is round the corner.
NIMISHA MISRA
How will I be impacted in case of a real estate buy
SURESH SADAGOPAN
There is no direct benefit arising out of the budget itself. However, some of the measures directed at the banks could positively impact the interest rates and they could come down. One of the direct benefits is that you may sell the real estate after a period of two years instead of three years ( in future ) and you will be subject to longterm capital gain treatment.
ANUPAN OBEROI
Do you think the tax measures will help get govt more tax?
SURESH SADAGOPAN
The personal income tax measures should be net positive for the government as in the higher slabs they would get 10% surcharge ( Rs.50 L - Rs.1 Crore ) & 15% surcharge above rs.1 Crore. They would have done that calculation before introducing the benefit for those in the lower tax brackets. So, on one hand a mass of people will get benefitted and on the other hand a much smaller set of people will compensate for the loss.
AJAY SHARMA
Do you think this tax schemes will make it worthwhile for the evaders to pay tax?
SURESH SADAGOPAN
You are asking the question that you should be posing to the finance minister! But, what the government is probably attempting to do is a mix of carrot and stick approach and also nudging the citizens along the digital payment mechanisms by making them easy to use and seamless. Then the government is also now vocal about the fact that they are doing data analytics and will be able to find people whose spending pattern do not match with their declared income.infact this last thing should be a big deterrent as most purchases are being captured today and government can easily piece together the data regarding a person and initiate any action it may deem appropriate. Due to all these, there would be more incentive for compliance.
SHANU SEN
What will be the impact on the real estate sector as FM has reduced the tax time on gains for immovable assets to 2 years
SURESH SADAGOPAN
This is actually a curious move. This will allow people to exit with a lesser holding period. But, that is hardly the prescription needed today. There is too much supply, both with the investors and with the builders and too few buyers. The problem is that one is not able to exit at all. That problem will not be addressed by this change of capital gains from three to two years. My assessment is that, this will have very little impact on the real estate sector for now.
SHIV GUPTA
How do you think the budget will impact black money?
SURESH SADAGOPAN
There are measures that they are contemplating - like Rs.3 L limit for cash transactions, Rs.2,000 limit for cash donations etc. Plus there is a push towards digital payments. All these would make the transactions transparent and black money will find hard to be there. Government is also intent on using Big data analytics to ferret out data about those who have black money based on their spending patterns. Plus, govt is trying to bring in regulations to ensure that people cannot borrow money and flee abroad. These are some of the measures. These and many more to come together would address the black money issue. Having said this, our people are innovative in finding solutions to intractable problems. The government need to constantly be on the run to catch such offenders.
SHIV GUPTA
Where should I invest to get maximum gains? Real estate, gold, commodities?
SMITA GHOSH
Which sector will be impacted the most post budget?
SAMHITA
No change in the capital gain tax and security transaction tax. Was this on expected lines?
SURESH SADAGOPAN
No. The general belief was that Capital gains/ STT were going to change for the worse! Probably, that was a leak which spooks people and when we find that there is no change, we tend to see it as positive. It is a mind game. It looks like we have been a party to it!