At the outset I would like to compliment the think-tank behind this budget. However, I’ve some concerns –
Real Estate Sector
Proposed Capital Expenditure increased from Rs 3.1 lakh crore in 2019 to Rs 10.5 lakh crore is a higher allocation by 3 times in 3 years which is really incredible. However, I am little disappointed from the announced that affect the real estate sector. The reinvestments from capital gains into housing has been capped at Rs 10 crore. HNIs always have used this tool to save capital gains by reinvesting the proceeds from capital gains into housing, however capping the same will restrict HNIs from using the proceeds from sale of residential house/ other assets again into housing for claiming tax benefits. Also, a restriction to claim interest on housing loan as a cost of acquisition if such interest has been claimed as a deduction, also restricts the benefit available to a home buyer when such property is acquired using a housing loan.
Start-ups
Extending benefits of companies registered as a startups for one more year was very necessary. Entities registered as a startups are exempted from 100% income tax for any 3 of 10 years. However, the exemption certificate required from the income tax department to be classified as an eligible start up to claim income tax exemption is not easily available. There are very handful companies who in spite of being classified as an eligible startups have actually got tax exemption certificate. I hope that the thrust and impetus that the government has shown towards startups ecosystem will be followed up with these administrative measures as well.
Tax Exemption/ Slab Limits
Increasing personal tax exemption/ slab limits and reducing the tax rate for HNIs from 42% to 39% is a very welcome move. This will increase disposable income which will in turn improve the entire economy. Also the budget no longer gives that needed advantage of saving into investment products of section 80 C which gave tax benefit to the extent of investments upto Rs 1,50,000. I am not in favour of this thought process but if it no longer gives a tax benefit, then I feel people rather than investing these sums in PPF and LIC, would use it on consumption.”
