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Budget to be tax-payer friendly; higher tax rebate on home loans may be on cards

The Union Budget 2017 to be presented on 1 February is likely to be taxpayer-friendly which will balance the pain of the cash crunch induced by the demonetisation announced on 8 November, a report by CNBC-TV18 said.

The budget is likely to focus on sectors such as agriculture, micro, small & medium enterprises and housing, the report said. The report said the government will have the thrust on welfare and skill development of the poor in a bid to lessen the pain from demonetisation.



After the demonetisation, there has been widespread lay-offs in unorganised sectors. According to a report in The Indian Express, a study by the All India Manufacturers Organisation found after the demonetisation SMEs have seen 35 percent jobs being lost and 50 percent revenue decline.

The government will have to devise measures in order to deal with the rising pain in the economy.

The finance ministry may also be planning to raise the limit for tax rebates on home loans, the CNBC-TV18 report said. Such a measure will be good for the banking sector and also the real estate sector.

The banks have witnessed a surge in the deposits after the demonetisation and they have also reduced the loan rates up to 100 basis points in a bid to woo borrowers.

Meanwhile, the already slowdown-hit real estate sector went downhill after the demonetisation. A report by consultancy firm Knight Frank has said that the note ban has severely disrupted the market sentiment in the fourth quarter of 2016 with sales plunging 50 percent to 8,617 units and launches 77 percent to 2,617 units in the Mumbai Metropolitan Region alone. Mumbai is one of the most important and expensive real estate markets in the city.

A tax rebate on home loans will be a much-needed handholding for both banking and real estate sectors.

For full coverage of Union Budget 2017 click here.

Updated Date: Jan 14, 2017 20:05 PM

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