More disposable income and increased loan eligibility for the aam admi
Satkam Divya
Finance Minister Pranab Mukherjee's recent budget announcements have come as a relief to the taxpayer. Under the revised tax structure, incomes between Rs 1.6 lakh and Rs 5 lakh will attract 10 per cent tax, while on incomes between Rs 5 lakh and Rs 8 lakh, 20 per cent tax will be applicable. For incomes above Rs 8 lakh, a rate of 30 per cent will be levied. The threshold for tax-free income remains unchanged at Rs 1.6 lakh. These tax concessions will put more money in the hands of consumers.
The revision in income tax slabs will increase the take- home salary of an individual earning 10 lakh per annum by Rs 50,000. This means that if he was earlier able to afford to pay EMIs for a loan of Rs 10 lakh, thanks to his increased disposable income, his eligibility for a housing loan has now increased by approximately Rs 5 lakh. The new tax slab would certainly bring a smile on the face of the aam aadmi.
For example, Ramesh, a resident of Delhi, earns a gross salary of Rs 1,00000 per month (Rs 12,00000 per annum). His salary structure and investments are as follows: Basic - Rs 40,000 HRA - Rs 35,000 Conveyance - Rs 800 Medical reimbursement - Rs 1,250 (or Rs 15,000 annually) House Rent - Rs 15,000 Investments under 80 C - Rs 1,00000 Therefore, his taxable annual income is Rs 9,43,400. While Ramesh would have paid Rs 1,87,020 under the old tax structure, he would now pay Rs 1,37,020.
Thus, Ramesh will now have Rs 50,000 (or Rs 4166.67 every month) more at his dis- posal. With the additional liquidity, Ramesh can either make further investments or increase his home loan affordability by that amount.
This means he can now afford to buy a house that costs Rs 4.5 lakh more (calculated basis an 8.25 per cent interest for a 20-year loan).
The writer is CEO and MD, Rupeetalk.com
Courtesy:- HT Estates dt:- 06-March-2010
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