New Delhi: Finance Minister Arun Jaitley unveils the budget on 1 February. The salaried class has a lot of expectations from the Budget. Increase in the personal income tax exemption limit and a higher deduction limit on home loan interest are among the common ones, say analysts.

The following salaried people’s expectations from FM Jaitley’s Budget 2017-18:

1. Raise minimum limit for taxable income

Considering the increase in cost of living, the current basic exemption limit of 2.5 lakh should be raised to Rs. 3 lakh. If the minimum limit is increased, it will not only benefit taxpayers at the bottom but also salaried class youth who are starting out as employees.

2. Change in tax slabs

A Change in of tax slabs will be a big balm for the salaried class. Currently, 10 per cent tax is charged on annual income of Rs 2.5 lakh to Rs 5 lakh, 20 per cent on Rs 5 lakh to Rs 10 lakh and 30 per cent on income above Rs 10 lakh. The first two slabs can be widened or taxed at a lower rate.

3. Raise exemption limit on allowances

Salaried employees enjoy exemption from tax on several allowances/benefits that the employer provides such as children’s education, conveyance, medical reimbursement, house rent and leave travel. The allowance limits were fixed a long time ago and need to be revised in view of inflation.

4. Increase deduction under Section 80C

Currently, deduction under Section 80C of the Income-tax Act is allowed from Rs 150,000 to Rs 300,000. If Jaitley increases the limit, he can boost household savings which can ultimately get invested and power growth.

5. Bring back deduction on infrastructure bonds

The government may reintroduce deduction of Rs 20,000 or actual amount invested, whichever is lower, for investments made in infrastructure bonds. This will also boost spending, spur growth and create more jobs.

6. Offer more incentives for NPS investment

Jaitley can offer more incentives for taxpayers to invest in the National Pension System (NPS). He can increase the deduction under Section 80CCD (1B) to Rs 100,000 from the existing Rs 50,000. He can also being NPS on par with the Employees Provident Fund or Public Provident Fund with respect to exemption of 100 per cent of the accumulated balance on withdrawal, subject to certain conditions.

7. Offer interest subvention on home loans

Prime Minister Narendra Modi has already offered interest subvention of 3 per cent and 4 per cent for loans of up to Rs 12 lakh and Rs 9 lakh, respectively, under the Pradhan Mantri Awas Yojana. However, these subventions are targeted at buyers in Tier 3 cities. Budget 2017 has scope of offering interest subvention on larger amounts of loan which will benefit buyers in big cities and other urban areas.

8. Allow higher deduction on home loan EMIs

Currently, the deduction available on interest on home loan is up to Rs 2,00,000. The deduction can be claimed on the principal repayment for up to Rs 1.50 lakh. There is a large scope in both cases to raise the deduction limits.

9. Allow early deduction on home loan EMIs

Deduction for interest on home loan is currently available only after the buyer gets the possession of the property. This means the benefit begins several years after the buyer gets the home loan and begins paying the EMIs. This deduction can be given right from the payment of the first EMI.

10. Raise exemption limit for senior citizens

The existing exemption limit of Rs 300,000 for senior citizens (60 years to less than 80 years) and Rs 500,000 for super senior citizens (80 years and above) could be enhanced to Rs 400,000 and Rs 600,000 respectively.

TST

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Retirement fund body EPFO may soon introduce a scheme to allow its over 4 crore subscribers to pledge their provident fund to buy low-cost houses and use the account to pay equated monthly installments.

“We are working on a housing scheme for members of the Employees’ Provident Fund Organisation (EPFO). Under it, members will be allowed to pledge their PF accumulations to buy homes,” Labour Secretary Shankar Aggarwal told PTI.

He added that the proposal will be placed before the EPFO’s Central Board of Trustees meeting expected next month. Once approved by the CBT, the scheme will be available for the subscribers.

Finer points of the scheme, as to what extent subscribers will be eligible to avail loans and what will qualify as a low cost house, are yet to be worked out.

Aggarwal further said: “We don’t want to impose anything on the subscribers. Therefore, we will not buy land or build houses for them. They will be free to choose their own homes from the open market.”

The panel had suggested this scheme for low income formal workers who are EPFO subscribers and could not buy a house during their entire service period.

Under the proposed scheme, there will be a tripartite agreement between member, bank/housing agency and EPFO for pledging future PF contributions as EMI payment.

Last year, the proposal for facilitating the EPFO subscribers to buy low cost homes was listed on the agenda of the CBT meeting held on September 16.

A report of an expert committee on housing facility for the subscribers was also presented to the trustees during the meeting.

The committee has unanimously recommended a scheme to facilitate subscribers to buy houses where they will get an advance from their PF accumulation and will be allowed to pledge their future PF contribution as EMI (Equated Monthly Instalment) payment.

The panel had suggested that subscribers will purchase a dwelling unit with loans from bank or housing finance companies and hypothecation of property in favour of the latter.

It was suggested the benefits under the scheme of Ministry of Housing and Urban Poverty Alleviation can also be extended to the beneficiaries of the scheme.

In May, Labour Minister Bandaru Dattatreya had told Lok Sabha in a written reply: “Government is exploring the possibility for providing a suitable low-cost housing scheme for subscribers of Employees’ Pension Fund. It is in preliminary discussion stage.”

Source : ET

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As soon as one starts looking out at properties to buy a house, banks start offering home loans. This can be overwhelming at times. Making a choice then largely depends on comparing what competitor banks have to offer. Here is a list, which compares home loan rates by different banks.
For a loan amount up to Rs 30 lakh and the tenure being 15-20 years, the following is on offering.

1. Floating interest rate of 10.15 per cent
This rate is being offered by the following organizations:

SBI ( State Bank of India)
ICICI Bank
HDFC Bank
HSBC Bank
Axis Bank
PNB Housing Finance
DHFL
India Bulls ( Up to Rs 25 lakh)
Citi Bank
Tata Capital Housing Finance Ltd

EMI per lakh works out to be Rs 975.

SBI charges a processing fee of 0.25 per cent of the loan amount up to Rs 25 lakh or minimum Rs 1000. For a loan amount above Rs 25 lakh the processing fee is Rs 3,250. Citibank charges 0.25 per cent of the loan amount. ICICI, HDFC and PNB charge 0.5 per cent of the loan amount as processing fees. However, HDFC has capped the maximum amount to Rs. 10,000. Whereas, Axis Bank and HSBC charge a minimum processing fee of Rs 10,000 or 1 per cent of the total loan amount. DHFL charges Rs 5000 plus document charges and taxes and India Bulls charges Rs 7,500 plus taxes.

2. Floating interest rate of 10.20 per cent
This rate is being offered by the following banks:

Federal Bank
Bank of India
UCO Bank
Canara Bank

The EMI per lakh works out to be Rs 978.

Federal Bank and UCO Bank both charge 0.5 per cent of the loan amount. The minimum amount charged is Rs 3000 and Rs 1500 whereas maximum is Rs 7500 and Rs 15,000 respectively by both the banks. Bank of India has decided to waive off processing fees on new loans sanctioned up to March 2015.

3. Floating interest rate of 10.25 per cent
This rate is being offered by the following lenders:

IDBI
Punjab National Bank
Allahabad Bank
Central Bank of India
Corporation Bank
Union Bank of India
United Bank of India
Bank of Baroda
Oriental Bank of Commerce
Kotak Bank
Dena Bank
First Blue Home Finance
Syndicate Bank
Indian Overseas Bank
State Bank of Travancore
Indian Bank

The EMI per lakh works out to be Rs 982.

IDBI, Punjab National Bank and Oriental Bank of Commerce have NIL processing fees. State Bank of Travancore does not charge any processing fee up to a loan amount of Rs 25,000 and United Bank of India has waived off processing fee for a loan amount up to Rs 75 lakh. Processing fee ranges from 0.25 per cent to 0.5 per cent of the loan amount. Allahabad Bank charges 0.6 per cent of the loan amount with a cap of Rs 12,000 while India Overseas Bank charges 0.58 per cent of the loan amount with a cap of Rs 10,190.

4. Floating interest rate of 10.26-10.30 per cent
Standard Chartered Bank offers 10.26 per cent on home loans with a processing fee of Rs 5500 plus service tax. The EMI works out to be Rs 982.

Vijaya Bank charges 10.30 per cent and the EMI works out to be Rs 985. The processing fee is 0.25 per cent of the loan amount with a cap of Rs 10,000.

5. Floating interest rate of 10.50 per cent and above
Deutsche Bank offers an interest rate of 10.5 per cent and a flat processing fee of Rs 12,000 plus taxes. EMI per lakh works out to be Rs 998.
Bank of Maharashtra offers 10.55 per cent (up to 25 lakh) and 10.75 per cent above that. Accordingly the EMI works out to be Rs 1001 and Rs 1015 respectively. Processing fee is 0.25 per cent of the loan amount subject to maximum of Rs 25,000.
ING Vysya offers 10.75 per cent, the EMI for which works out to Rs 1015. Processing fee is 0.5 per cent of the loan amount.
Development Credit Bank and Dhanalakshmi Bank offer 11.50 per cent and charge a processing fee of 1 per cent. EMI per lakh works out to be Rs 1066.

6. Fixed rates on offer
LIC Housing Finance offers 10.10 per cent (fixed for 2 years)
HDFC Ltd offers 10.15-10.65 per cent (fixed for 2-3 years) and 10.25- 10.75 per cent (fixed for 10 years).
Axis Bank offers 10.40 per cent (fixed for 20 years)

Look out for festive offers when processing fee is waived off and always negotiate for better rates. Request your bank official to share complete details so that there are no surprises in the form of hidden charges, pre-payment charges etc. Also, find out about special rates applicable for self-employed individuals and women.

Hope this compilation helps you in analysing what suits you best.

Data source: deal4loans.com

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