If you are planning to buy a house, grab it before July, as realty prices are set to increase later. The service tax of 3.3%, announced in the Budget, will be effective on your home from July as the amendments to the Finance Bill will be put into effect in June. Moreover, banks have decided to increase interest rates in the range of 0.25-0.5 percentage points on home loans, which could further be hiked in the forthcoming credit policy. Companies including realty majors like DLF, under the aegis of Delhi-based real estate body National Real Estate Development Council (Naredco), will soon approach the FM for a rollback of service tax. The property prices are expected to go up with real estate companies passing on the additional burden to buyers. Effectively, someone buying a house property in Delhi will have to pay a service tax of 3.3% on the price of the accommodation and also a stamp duty of 8% as a sale of immovable property. The 3.3% tax will not include the amount to be paid towards special charges like garden facing or community hall facility as these charges will be taxed at 10% of the total charges. However, Sanjay Chandra, MD of country's second-largest realty firm Unitech says an increase in interest rates is unlikely to affect the demand as the increase is only in trigger rates and hence there is no change in effective interest rates. "The service tax will have some marginal impact, but the market will absorb that for two reasons. One, the change in personal tax slabs will leave more disposable income in the hands of consumer and second, the better prevailing economic conditions are likely to result in at least 10% increase in the salaries of the working class for the next financial year. These two facts will more than offset the marginal impact of service tax, which is expected to be 2% to 3%," he said. When contacted, Naredco president and realty company Omaxe's group chairman Rohtas Goel said, "We will hold a meeting of the association to discuss the Budget proposals, particularly levying of the service tax on housing, which will have a negative impact on the realty sector." However, finance ministry officials have said they won't entertain any request for change in the Budget proposal. Central Board of Excise and Customs member YG Parandhe said, "We are not taking up the issue as it stands now" when asked if there is a possibility to relook at the proposal.
The Central Board of Direct Taxes(CBDT) has said the direct tax collection targets for the country have been set at Rs 4 lakh crore of which 2.8 lakh crore have already been collected so far. "We are going to put in serious efforts and achieve the mark of Rs 4 lakh crore," said S S N Moorthy, chairman,(CBDT) at CII event on Friday.. Moorthy further added that the tax collection targets for Mumbai have been set at Rs 1.42 lakh crore of which Rs 1 lakh crore has been collected so far. He however confirmed that it would not be advisable and possible to abolish the wealth tax. "Even in western countries, the Estate Duty is collected which is similar to the Wealth Tax in India," he said. Commenting on the Union Budget 2010, Sunil Mitra, revenue secretary, ministry of finance, said that the Budget clearly showed the government's vision of becoming a facilitator from enabler through increasing budget outlay for infrastructure development. "The strong message that is coming up from the Budget is that the government is now going to become a facilitator as it earmarked Rs 3 lakh crore for the development of physical and social infrastructure. Moreover, increase in public equity in four companies like, NTPC, REC etc in the previous year showed government's commitment towards the disinvestment raising Rs 13,000 crore.
General Motors Co said on Friday it will offer reinstatement to 661 of its U.S. dealers that had been targeted for closure as part of its bankruptcy restructuring last year. GM planned to terminate franchise agreements with about 1,300 U.S. dealers by the end of 2010 in a bid to operate its retail networks more efficiently and return the company to profitability. Some 1,160 of them have sought arbitration. GM North American President Mark Reuss said the automaker has opted to reinstate more than half of the dealers appealing closure in an effort to complete the arbitration process before the congressionally mandated deadline of July 15. The company plans to continue settlement talks with some 500 dealers who will not be offered reinstatement and remain in arbitration, Reuss said. To be reinstated, the dealers will have to meet certain business criteria, including minimum working capital requirements, sales and profitability within 60 days of receiving reinstatement letters next week, GM said. "We are highly confident that this is the right size and the right quality," Reuss said in a conference call with reporters. GM had 6,150 dealerships at the end of 2008, including franchises of Saturn, Saab, Hummer and Pontiac -- the four brands GM is selling or winding down. The U.S. Treasury owns 60 percent of GM after the 2009 bankruptcy restructuring. Congress in December required an arbitration process for terminated dealerships at GM and Chrysler, which received more than $65 billion combined in taxpayer-supported bailouts and other financing over the past year. Chrysler closed nearly 800 showrooms last June when it emerged from bankruptcy under new management led by Fiat. More than half of them have sought arbitration, saying their franchise rights were terminated unfairly. The arbitrator under the legislative plan would be required to consider dealer profitability over the past four years as well as how a dealer would support the plans at GM and Chrysler to become viable. Arbitration would also take into account how well a dealership was capitalized and dealership performance. GM Chief Executive Ed Whitacre said in January the company would review the circumstances surrounding termination decisions that were made under his predecessor, Fritz Henderson, who was forced out in December in a split with the board. GM has already agreed to reinstate dozens of dealers in an earlier, in-house appeals process. It has also budgeted up to $600 million to compensate dealers.
