New Delhi: In an attempt to wean away people froom buying
gold, finance minister P. Chidambaram on Thursday proposed higher interest
deduction for home loans, offered extended sops for equity investment and
proposed to launch inflation-indexed bonds.
“Increasing savings and their optimal allocation for productive uses lead
to higher economic growth. After touching a high of 36.8 per cent in 2007-08,
gross domestic saving fell by six percentage points in 2011-12.
The household sector must be incentivised to save in financial instruments
rather than buy gold,” the finance minister in his eight budget on
Thursday.
He offered the additional deduction of Rs 1 lakh for people, who a house
for the first time, during the financial year 2014. This deduction will be over
and above the deduction of `1.5 lakh allowed for self-occupied properties under
Section 24 of the Income-Tax Act.
"A person taking a loan for his first home from a bank or a housing finance
corporation up to Rs 25 lakh during the period April 1, 2013 to March 31, 2014
will be entitled to an additional deduction of interest of up to Rs 1 lakh,” he
said.
“This will promote home ownership and give a fillip to a number of
industries like steel, cement, brick, wood, glass etc. besides jobs to thousands
of construction workers,” the minister said.
He said that if the limit is not exhausted, the balance may be claimed in
2015-16.
The finance minister has also extended the income eligibility criteria for
claiming the deduction under the Rajiv Gandhi Equity Savings Scheme from `10
lakh to `12 lakh.
“The scheme will be liberalised to enable the first time investor to invest
in mutual funds as well as listed shares and she can do so, not in one year
alone, but in three successive years. The income limit will be raised from Rs
10 lakh to Rs 12 lakh,” the minister said.
The Economic Survey on Wednesday had suggested the government to take more
steps to curb gold demand in the country to arrest the rising in current account
deficit. “Until people have reliable alternate sources, they will keep on
buying gold,” it said.
Offering an alternative to gold, which would protect investments from
inflation, the minister said that he would, in consultation with RBI, introduce
instruments that will protect savings from inflation, especially the savings of
the poor and middle classes.
“These could be Inflation Indexed Bonds or Inflation Indexed National
Security Certificates. The structure and tenor of the instruments will be
announced in due course,” he said.
The Survey also noted that the yellow metal has been a combination of
investment tool and status symbol in India. “With limited access to financial
instruments, especially in the rural areas, gold and silver are popular savings
instruments. The recent slowdown has seen people across the board purchase
gold.”
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