Union Finance minister Nirmala Sitharaman’s Budget proposals not only score well on the big ticket announcements, but they have much to offer for consumers too. From seeking to break the monopoly of power discoms to reducing import duty on precious metals to extending higher tax deductions on loans for affordable housing by a year, the measures announced in the Union Budget are centred around supporting consumption. Experts believe that the extension of tax exemption schemes in affordable housing alone can act as a multiplier effect on the GDP.
Even though the agriculture infrastructure and development cess of 5% has been levied on several products, consumers will not feel the pinch when it comes to diesel and petrol, as it will be offset by reduction in the the basic excise duty (BED) and special additional excise duty (SAED) rates.
In a move to boost demand for affordable housing, the Union government in July 2019 had provided an additional deduction of interest, amounting to `1.5 lakh, for loan taken to purchase an affordable house. The FM proposes to extend the eligibility of this deduction by one more year, to 31 March 2022. Commenting on the move, Anuj Puri, chairman – ANAROCK Property Consultants, said: “This will keep demand buoyant for affordable housing in 2021 as well.” As per ANAROCK Research, affordable housing already accounts for more than 35% of the supply across the top 7 cities in the country.
As the world’s largest consumer of gold, a decline in the price of the precious metal should surely bring cheer to consumers. Gold and silver presently attract a basic customs duty of 12.5%, but this has been lowered to 7.5%. However, the effective tax on gold and silver will come down by 2.5%, as the decrease in customs duty will be partly offset by an increase in agri cess.
The FM also resolved to give consumers more choice when it comes to power distribution companies, which are often monopolies. The FM said that a framework was being put in place to give consumers an alternative to choose from among more than one distribution company.
Digital payments too found a place in her Budget speech, and to give them a boost, the Budget has earmarked `1,500 crore for a proposed scheme to provide financial incentive to promote such modes of payment. Rustom Irani, MD and CEO, Hitachi Payment Services, on India Budget 2021, said: “By allocating `1,500 cr for a scheme for financial incentives to boost digital payments will further drive digital payment penetration in the country.” On the downside, some products may become a tad expensive where import duties have been tweaked. To give domestic manufacturing a boost, the government has withdrawn some exemptions on parts of chargers and sub-parts of mobiles. Further, some parts of mobiles will move from ‘nil’ rate to a moderate 2.5%.