Relief for home owners
The Modi government doubled the tax exemption limit on price differential between the circle rate and the agreement value to 20%, a key component of the new Rs 2.65 lakh crore economic stimulus package that also includes easy working capital to loans to 26 sectors hit by the Covid-19 pandemic, and incentives to companies to hire more people.
Finance minister Nirmala Sitharaman announced 12 measures under the third tranche of the government’s efforts to boost the economy. This includes the Rs 1.46 lakh crore production-linked incentive (PLI) for 10 sectors that was announced on Wednesday.
The Prime Minister Shri Narendra Modi has said that Aatmnirbhar Bharat package is a continuation of the government’s effort to help all sections of the society.
In a tweet Shri Narendra Modi said ” Today’s Aatmanirbhar Bharat Package continues our efforts to help all sections of society. These initiatives will help in creating jobs, alleviate stressed sectors, ensure liquidity, boost manufacturing, energise real-estate sector & support farmers.
Finance minister said that including the Rs 2,65,080 crore package announced Thursday, the quantum of total stimulus announced by India is Rs 29,87,641 crore, including the monetary measures taken by the Reserve Bank of India (RBI) – or around 15% of the gross domestic product (GDP). Minus the RBI’s monetary measures, the size of the stimulus is 9% of the GDP, she added.
The finance minister also pointed to recent indicators on the economy’s revival, including the composite Purchase Managers Index that came in at 58.9 in October, and credit carting firm Moody’s assessment that the Indian economy would shrink by 8.9% in calendar year 2020, better than its previous estimate of a 9.6% decline. To be sure, the Reserve Bank of India’s (RBI) Nowcast report projected that the Indian economy could have contract 8.6% in the next three months ended September.
Among the announcements on Thursday, the one on employment generation involves the government paying out both the employee and employer contributions of employees hired on or after October 1, 2020, for a period of two years under certain conditions (the monthly salary should be less than Rs 15,000 and the company should have up to 1,000 employees). For companies with more than 1,000 employees, the government will pay out the employee contribution only. The scheme, Aatmanirbhar Bharat Rozgar Yojana, is aimed at incentivising job creation.
Speaking about the income-tax (I-T) relief to home buyers and developers, Sitharaman said: “There are quite a lot of [unsold] inventories we are told in the real estate sector… at the moment what is prevailing is the differential between the circle rate and the agreement value… you get relief. Now, what we have decided is to increase the differential between from 10% to 20% for the period from the date of this announcement to 30 June 2021 for only primary sale… and the necessary amendment in the I-T Act will be done in the due course.”
The finance minister said the decision on the price differential for homes will help to clear unsold inventories.