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Two Budget proposals could curb the demand for residential properties, whose market has already slipped after demonetisation. According to the Budget, a person owning a second home can claim a deduction of Rs 2 lakh a year on account of losses on it. Currently there is no limit on the deduction that can be claimed. “Unless property prices start appreciating, this move will reduce the incentive a salaried person earlier had to invest in a second home and optimise tax. We believe this is likely to impact demand, especially in the top seven metros (more service-sector jobs), in an already weak market,” said Samar Sarda, Nischint Chawathe and Abhijeet Sakhare of Kotak Institutional Equities in a report on February 2.   Further, there could be prepayments of loans on such properties, and that might put pressure on housing finance companies, they said.   Abhishek Anand, an analyst with JM Financial Institutional Securities, said the move increased the cost of funding by ...

The goods and services tax (GST) law that has been drafted has a provision that did not get the attention that it deserves. It relates to the anti-profiteering measure in Section 163 which is quoted below: “163. Anti-profiteering Measure (1) The central Government may by law constitute an Authority, or entrust an existing Authority constituted under any law, to examine whether input tax credits availed by any registered taxable person or the reduction in the price on account of any reduction in the tax rate have actually resulted in a commensurate reduction in the price of the said goods and/or services supplied by him.” It is one of the most devastatingly retrograde measures that have been incorporated in the GST law. Because of the intense hullabaloo that went on in the GST Council over the rates of duty and the control by the Centre and the states on assessees, this aspect of the matter must not have gotten the benefit of detailed discussion that it deserved from the GST Council. ...

Unnecessary queries and delays in refund likely to reduce From the next financial year, 201718, it will get tougher for taxpayers to avoid filing returns. But at the same time, unnecessary queries in case of a tax notice and endless waiting in case of appeals may soon come to an end. The Union Budget 2017-18 has provisions that seek to promote compliance while making things easier for those who comply. Fee for delay in filing returns: Currently, if a taxpayer does not file returns on time there is a penalty. The penalty is discretionary and payable post facto, that is, after you have filed returns. It is also levied only if it is proved that the taxpayer has intentionally not filed returns. So, technically it is possible to delay filing returns till the end of the next financial year. This means for FY17, returns have to be filed by July 31, 2017. It can be delayed till March 31, 2018, if there is no tax payable (if you have only salary income and the entire tax is cut by way...

Sebi asked to provide details of such transactions for finance ministry and tax department to study these and issue final guidelines on ‘anti-abuse’ measures   The finance ministry has sought an “exhaustive list” of wide-ranging off-market transactions from the Securities and Exchange Board of India, to decide whether  investors have to pay long-term capital gains (LTCG) tax under a new rule. The proposed clause in this year’s Budget says those who acquired shares in unlisted  companies after October 1, 2004, will have to pay LTCG if they hadn’t paid securities transaction tax (STT) at the time of purchase. At present, STT is not paid  when shares are acquired in off-market transactions such as mergers and acquisitions,qualified institutional placements or private equity investments in unlisted companies.   The ministry official and the tax department are working closely to finalise guidelines,to be issued after considering the concerns raised by ...

The government is planning to resume labour reforms by introducing twolabour Bills in the second half of the Budget session of Parliament,a move Likely to be resisted by Opposition parties andunions.  The Bills are the Industrial Relations Code Bill, 2016, and the Wage Code Bill, 2016.The second half of the session begins on March 9.Labour ministry officials say that all formalities, including tripartite consultations with the trade unions and approval from the law ministry,have been done.  Both the Bills are with a Group of Ministers. It will make changes if required and then they will be placed before the cabinet.  The government wants to integrate around 40 labour laws into four pieces of legislation. For example, all wage-related laws will be amalgamated to form the Wage Code and the industrial relations laws will be part of the related Code. In his Budget speech, Union Finance Minister Arun Jaitley reiterated forming the four labour Codes,the process of whi...