Direct Tax Code (DTC) with new amendments ?
The Direct Tax Code (DTC) bill, supposed to be implemented effective April 1st 2012 and which has seen its fortunes swing from one end to the other might bring some relief to tax payers this year.
The government is contemplating tweaking the income tax slabs and taking the income tax slab exemption limit from Rs 1.8 lakh to Rs 3 lakh. What this means is that currently, you pay no income tax if your income is less than Rs 1.8 lakh, now that limit is being raised to Rs 3 lakhs.
The new income tax rates could be 10% for the slab of Rs 3 lakh to Rs 10 lakh, 20% for up to Rs 20 lakh and 30% beyond that.
Not just that, if your income is less than Rs 5 lakh, you might not have to file income tax returns. Last year, though the government had said that no income tax needed to be paid if income was less than Rs 5 lakh, barring some caveats, an assess still needed to file his income tax returns – this is set to change now.
It will be worth a wait as what the DTC will contain and what it will leave out is something which has been quite a botheration for everyone.
Birla Sun Life insurance advertisement tries to ride on Yuvraj’s illness
This was something which we all could do without. When the news broke about Indian cricket Yuvraj Singh was in the United States for his cancer treatment, our heart went out to him. Here was a lad who was and is the brand of Indian cricket and suddenly he was left at the mercy of a deadly disease.
And then you had an advertisement from Birla Sun Life insurance flashing on TV’s wherein Yuvraj was shown talking about his current health. The same ad was shown in 2011 in a different context where Yuvraj was not talking about any health issues. I personally consider this as unethical because an insurance company is wanting to ride on investor’s emotional wave to sell its policies.
The problem I see is that Birla Sun Life insurance or anyone for that matter should not be riding on an icon’s poor health status to sell its products. I also think that a lot of gullible investors will perceive “health” with life insurance and end up taking life insurance policies in place of mediclaim.
RBI’s dictat makes home more expensive
The Reserve Bank of India has asked banks to exclude stamp duty, registration fee and other levies from the total cost of a property. The recent RBI directive is going to make investors put in around 25% to 30% of a property value as down payment. Earlier, this was around 20%.
While these figures vary from state to state, investors hunting for a house suddenly have to save more for the down-payment. This means a delay in the purchase of their dream homes.
This also might cause an impact to home sales in a market that is already struggling with high home loan rates and less inventory sales.
IRDA to curb bundled in covers
The insurance regulator IRDA has voiced concern that insurance is being sold with primary services and that this can lead to mis-selling.
Examples where insurance is sold in a bundled manner is by automobile dealers when they give insurance free as part of car sales. Insurance is also sold with credit cards, mutual funds and home loans. Sales people portray this as freebies that the customer is getting with the product. This can also lead to forcibly giving insurance when the customer does not really need it or want it.
In many cases, the investor does not have a clue that insurance is coming bundled with the primary good or service. IRDA is now debating how best to have this marriage of insurance and sale of services.
Thoughts, dear readers ?
Change in Tax slabs
———————
I am so thrilled about the new tax slabs. I am currently under 30% slab but with new tax slabs I will shift to 20% slab. I am sure this would be the case for many salaried people. We can easily save around 5k per month more. But careful guys, dont allocate that extra savings to your discretionary expenses. Utilise that extra money wisely.
But we also have to look at the other side of the coin. Pranab babu can never give huge benefits to the public. Watch out for areas where he will be charging more taxes, e.g. Tax on diesel cars.
BSL insurance ad
——————-
I havent seen this ad but if this is true I am shocked that it has been allowed to air. I agree this is highly unethical, moreover pathetic idea to ride on someone’s illness. If the ad continues I will not make any future investments with an unethical company and recommend the same to all the readers.
RBIs new home loan directive
——————————
My reaction towards this is good and bad.
The bad is obvious that already burdened common man with high interest rates is now forced to arrange almost 30% down payment. The sales of builders will also get a hit but I have no sympathy for them as they are already having ridiculous margins.
The good is due to this decision the demand will come down and there is a potential for some correction in property prices.
Does anyone know what the exact reason for this change is?
Bundled insurance product
—————————-
It’s high time that IRDA interferes and stop these bundled products. The public is already a victim of endowment plans, pension plans, child future plans etc and on top of this free insurance with credit cards, MFs. People dont read the fine print of policies anyways and the companies take advantage of it. And with such policies people start thinking that they are adequately covered.
I request readers to stay away from such bundled products. Always take vanilla products when it comes to insurance.
@Vivek K, Appreciate your detailed comments here Vivek.
@Radhey Sharma, Thanks Radhey. Today I was having a chat with my friend on this Yuvraj Singh’s ad [strangely I haven’t come across it yet]. My friend likes this ad and when I asked why, she brought a different perspective to this altogether and I thought let me share with everyone here.
She said that may be Birla is trying to send a message to general public that even a celebrity can suffer from a disease and can need insurance. For people who think that I don’t need an insurance, think again! If it can happen to your role model, it can happen to you. So think and act now.
It is indeed true that people in our country feel that they don’t need insurance or they just procrastinate when it comes to insurance. If we see the ad from the above perspective then may be it isn’t so bad after all, is it?
@Vivek K, ell you do have a point but the timing of the ad raises a lot of doubts. !
Only if it could have been sooner.
You can try to see the ad on youtube. It should be there somewhere. Also note that the ad is no longer playing and is now an abridged version of the first one.
@Radhey,
I don’t watch TV, will see if i can get the add on youtube. There are some smart guys who did the add, especially the timing.
I don’t think it went well with the general public that’s why they took it off.
@Radhey,
Thanks for the compilation. It would be nice if the tax slab is increased to 3 lakhs, this will bring a lot relief to most of the tax payers.
Was very surprised on RBI decision to exclude stamp duty & registration charges from the total property. IT will hurt badly to new loan seekers.
Rakesh
@Rakesh, I have read the reason for that is to stop speculation from vested interests in the real estate market though honestly I don;t understand what that means !
RBI’s decision on home loan:
Hope builders have to reduce they price for further selling.
The problem is for the people who just applied for loan and not yet approved or who have thought to apply it within few months, as RBI has asked this with immediate effect their plans/estimates will have big problem.
@Chirag, Builders will never reduce their prices. I am sure about that !
Agree with Radhey, builders will never reduce price if there is demand. If the market goes down like the one in 2008 and they are under huge loans they will reduce the prices.
If you are willing to pay them in black then they will definitely reduce Rs.200-300 per sq. feet.
@Radhey Sharma, Ya Radhey, you are right they won’t reduce so easily :(.
@Radhey Sharma, Let’s hope for another crash like 2008 in real estate. I purchased my apartment during that phase and it turned out to be a pretty good deal. I know builders seldom reduce the prices but if you try and negotiate hard and offer some cash [not necessarily black] upfront, you can strike a deal.
All of us have negotiation skills that we use to reap benefits for our respective organisations but strangely the same skills go and hide somewhere when it comes to benefit ourselves. 🙂
Agree with Vivek. I too purchased during 2008 turmoil and got a good deal. I offered upfront cash(some black money too) and got a savings of Rs. 500 per sq. feet. That also helped in reducing the stamp duty & registration charges. We just have to be alert opportunities will always come.
Rakesh
@Rakesh, 500 per sq foot is a great steal I must say.
@Radhey,
Yes, It was a good deal even i was surprised, later came to know that builder had huge loans. Moreover i booked the flat in a high-floor and he did not charge me for the same.
@Rakesh, But that is a risk you were taking – builders with huge loans often vanish overnight. No ?
@Vivek K, So if you are hoping for a crash, you are ok for your personal net worth to go down on your current house ?
@Radhey,
Yes i had that in mind while buying the flat but i took the risk because the deal was very good. Just 2 mins from this place another builder was offering 500 rs more per sq. feet.
The project was just delayed by 3 months and the builder did a decent job.
@Radhey Sharma, Good question Radhey and an interesting one too.
Well I gave it a thought and I don’t really mind my personal net worth to go down on paper. Remember this is going to be temporary and I’d be worried only if I were planning to sell it. I was lucky to “cash the crash” and I hope everyone gets a chance. Buying a home is everyone’s dream and it should not be shattered to someone’s greed. I just want some realistic correction to happen to create a win-win situation.
Ya I was also surprised when I saw Yuvraj’s ad first time.
@Chirag, Sometimes wonder why Yuvraj agreed to do it in the first place.
@Radhey Sharma, Same here, even I wonder about that. Not sure might be for MONEY !!!!!!
@Chirag, Greed my friend greed, it’s always the greed!
Obviously it has to be for the money……….
Hey the new tax slabs sound exciting.
And indeed a reputed company like BSLI shouldn’t have taken undue advantage of anybody’s illness like this.
Regarding RBI’s new show, God knows what they are upto. As far as builders are concerned, 1-2 days back I had read on the internet (http://nripro.com/dp/what_is_construction_cost_in_pune) that the builders have a margin of 200-300 PERCENT!! No wonder real estate is a BLOOMING business.
May they show little leniency to the common people & lower the property prices.
@Sudip D, I am doing another article on the RBI impact to home loan seekers. It will be out today. Watch for it.
@Sudip D, Leniency from builders..? LOL .. you must be joking Sudip!
The only reason they would cut prices is when the sales is hit badly and their money is stuck and customers of existing projects start filing cases on them.
@Vivek K, lol. I know.
Everybody is in the race to make maximum possible profits.
@Sudip D, Let me rephrase your statement to suit the real estate business: –
Everybody is in the race to make maximum (un)imaginable profits. 😀
@Vivek K, Lol. Seriously!!
The flip side..
A small change in rules/policy always has a huger impact on the industry.
This means although the policy change will not have significant financial impact on the buyers there will surely be a psychological effect…. thereby we may soon notice a decrease in the property sale.
Survey also says — According to PropEquity, a real estate research and analytics company, absorption of homes in the National Capital Region came down from 55,372 units in 2010 to 25,623 units in 2011, a decline of 53 per cent
This decrease can also be due to the cause of The Reserve Bank of India (RBI) raised interest rates 13 times between March, 2010 and October 2011.
All these will soon FORCE reduction in prices of property and a revision of interest rates !!
@Sana, Let us hope so. Thanks for contributing here.