Byapaar.com -The Indian Business Blog

The Union Budget for the financial year 2008-09 has brought few smiles on the faces of middle class people. It is clear that, the UPA government has an eye for early national pools -may be by end of this year and hence there is lots of cheers for the all powerful middle class.

The Finance Minister has not only raised the taxable income level from that of last year, but it has also offered some schemes to lessen tax liability. For example, if someone is earning a monthly income of Rs. 25,00/month, his current tax liability is around Rs. 3,347.50/month. In the new taxation syste, the liability for the same income will be Rs. 1,287.50/month and that too without claiming any tax benefit on offer.

So how to save this extra money?

The best way, according to analysts is to invest in real estate. Due to higher interest rates - the rela estate market has been going through aprice adjustment or correctional phase over the last few months. So price is quite stable at the moment. The new budget is not offering any extra benefit under Sec. 80 C or Sec 80 D - but due to lower tax liability, the taxpayer can easily utilize the fund judiciously.

The Sec. 80 C has been facilitating tax benefits for certain saving instruments including repayment of home loans. But only Rs. 1,00,000/annum can be accounted for this purpose. One can also claim benefit for Rs.1,50,000/annum as repayment of interest for the housing loan. So thats a cool benefit for Rs. 2,50,000/annum.

Another attractive factor in this regard is that, some banks are already lowering interest rates for housing loans and it seems that, the home loan iterest rate might come down further due to global meltdown trend.

Now, we may consider how one gains through investment in real estate properties. Studies have shown that value of Indian real estate properties has seen a compunded annual growth rate of around 15-18 percent. S, the value is always increasing.

Just one point to be cautious is that, the government is giving these sops for personal or live in properties only. If some one buys a property and sells it within next five years, then he/she will have to pay taxes for all these years.

If you have a house and are pondering at what to do - just go ahead, take home loans, buy a nice property and rent it out. The rent will help you pay the EMI (Easy Monthly Installment) and by the time you are ready to settle down, your home loan liability will be NIL. You can enjoy your superannuiation benefits for your recreations. Just remember one thing - the tax implications in this case will have to be worked out after deducting the rent you get. Stil you are the winer.

The Indian Finance Ministry has recently announced a ten year tax holiday for developers f industrial parks set up during April 1, 2006 to March 9, 2009. The incentive is primarily aimed at providing a boost to India’s industrial infrastructure. The Industrial Development Scheme 2008 notified by the Central Board of Direct Taxes (CBDT) held that the industrial park developers would be eligible for 100 percent tax deduction which would be provided for ten out of fifteen consecutive assessment years after the commencement of operation of such units. Under the scheme, an industrial park should have at least 30 units. To avail of the tax benefit, the industrial park would have to be owned by a single undertaking. The area allocated or to be allocated to industrial units would have to be at least 90 percent of the allocated area. Ministry sources clarified that such industrial parks developed operated or maintained during 2006-07 would have 2007-08 as tax assessment year.

India is emerging as a favorite investment destination for top Japanese companies as large conglomerates from the far-eastern country begin to diversify away from neighboring China, their earlier hotspot. While China still maintains the top position as an investment destination, a lesser proportion of companies (68 percent) China as a promising country. China has seen a decline for four straight years since its peak in 200. India ranked second among Japanese companies as a promising country for investment. By industry, automobile-related companies saw a particularly positive stance. In fact India ranked highest among Japanese companies as promising country for doing business in the long term, ahead of China for the first time since the survey has been conducted for the last 18 years

The Indian Government on January 30^th brought major changes to Foreign Direct Investment (FDI) rules, easing existing curbs on overseas capital in such key areas as real estate, petroleum refining, commodity exchanges, mining and aviation.

The decision taken at a meeting of the Cabinet follows a month-long review of the FDI policy, which the government began as part of efforts to boost foreign capital inflows. The review however did not include the politically conscious issue of allowing foreign multi-brand retailers like Wal-Mart and Carrefour to open front-end stores here.

The changes cleared by the cabinet included increasing the limit of FDI to 100 percent for titanium mining and aircraft maintenance companies from 49 percent to 74 percent in cargo and chartered airlines, from 26 percent to 49 percent in public sector refining companies.