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News INCOME TAX

  • Nov 13, 2020
  • FM Sitharaman announces tax relief on some home deals; stimulus tops Rs 30 lakh cr

    Finance Minister Nirmala Sitharaman on Thursday announced tax relief on select home sale deals, enhanced credit guarantee programme for small businesses and provide incentives for new job creation as the government widened stimulus measures to boost the economy.
    The measures, that also include additional fertiliser subsidy and already announced production-linked inventive scheme for manufacturing units, totalled Rs 2.65 lakh crore, taking the cumulative stimulus package announced since the lockdown to almost Rs 30 lakh crore, or 15 per cent of the Gross Domestic Product (GDP).

    It also includes additional funding for real estate developers and contractors, a new employment scheme and additional spending on the rural jobs plan.
    Sitharaman cited data, including increase in tax collections for goods and services, rise in energy consumption and improvement in bank credit to state that the economy was seeing “strong recovery” taking root.
    The Indian economy has recovered from its worst-ever contraction of 24 per cent in the April-June quarter but will end up shrinking by close to 10 per cent in the fiscal year to March 2021.
    But she saw hope in the Reserve Bank of India predicting a strong likelihood of growth in the current quarter.
    Doubling down on the previously announced measures, she said income tax law will be relaxed to allow primary or first sale of housing units of up to Rs 2 crore at a price that can be 20 per cent below the stamp duty circle rate.
    Currently, the law restricts differential between circle rate and agreement value at 10 per cent, and “the move will help reduce hardships faced by both home-buyers and the developers and help clear unsold inventory,” she said.
    Under the new job creation scheme, the government will provide a subsidy equal to the contribution that an employee and the employer have to make towards the retirement fund (totaling 24 per cent of the wages) to establishments that hire new employees or re-hire those it fired during COVID-19 pandemic, she said.