GST and How Will It Impact The Real Estate Sector

The Goods and Services Tax (GST) is a detailed, multi-level, destination-based tax that is scheduled to be imposed on every value addition. The multi-level is related to the processes an item undergoes, from manufacture or production to the end sale. Purchase of raw materials comes first. The second stage includes production or manufacturing, which is followed by the warehousing of materials. Second-to-last comes selling the product to retailers. Finally, at the end level, the retailer sells you, the consumer, the product, which leads to completion of its lifecycle. A GST will be levied on each of these levels, which is why its description includes the world ‘multi-level’.

The word ‘destination-based’ is a little simpler to understand. A GST will be imposed on all exchanges taking place during the manufacturing chain. In the past, when a product was being manufactured, the centre would impose an excise duty on the manufacture, and then the state would add a value-added tax when the item was sold to the next phase in the cycle. This entire process would repeat itself at the next point of exchange. Now, instead of all those, a GST will be imposed at every level.

However, the most significant impact of the GST is likely to be on the real estate sector, thanks to a number of substantial benefits.

Also Read: Impact of GST on Home Loan

The Influence of GST On Real Estate

  • A number of industry experts predict minimal impact on property and home prices in the short term, but admit that the simplified tax structure that GST brings will benefit general perception of the sector, eventually benefitting stakeholders of the residential real estate.
  • Currently, the development and sale of property is attracting high amounts of both state and central taxes. Especially when it comes to purchase of an under-construction property, the number of taxes imposed is too varied and complicated. The scenario is slightly better when purchasing a completed asset, thanks to the exemption on VAT and service tax, but it still includes stamp duty and registration charges. Additionally, since these two are state levies and hence differ according to each individual state, the amount of confusion for buyers is too high.
  • This is where the benefit of GST comes in. Thanks to the new tax, all properties undergoing construction will be charged at 12% on property value (not including stamp duty and registration charges). However, this will not be enforced on finished projects, since no indirect taxes are applicable in their sale. Transparency in taxes is the most beneficial aspect of GST. Also, an added benefit is that any developer will be able to avail input tax credit after sale against taxes paid by the property purchaser.
  • For developers, the opportunity to claim input tax credit will definitely improve their profit margins.
  • Although GST will be counter-productive for cooperative housing societies due to higher maintenance charges, property taxes, utility bills, and more expensive repair work, the government’s inclusion of an anti-profiteering clause which makes passing forward benefits of tax reduction to customers a compulsion, will still make it a beneficial tax bill for most.

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BL - May- 45 - The Fundamentals of Your Business Credit Score

The Fundamentals Of Your Business Credit Score

If you think personal and business credit score is the same – spoiler alert! It is not. Business, being a different entity, has a separate credit rating. The personal credit score may also affect the business credit score. Not knowing the difference can likely affect your eligibility for business loans.

Let us have a look at the basics of business credit score.

What Is A Business Credit Score?

It determines the creditworthiness of a business. Thus, a business credit score gives an estimate of the repayment capability of an organization. A third party evaluator derives the score. It gives an insight into the debt management ability of a business. Various parameters are used to calculate the rating. They are financial, non-financial, credit history, and business and market potential.

Who Derives the Score?

India has many credit rating agencies. Some of the major agencies operating in this industry are CRISIL, ICRA, CARE, ONICRA, FITCH & SMERA. CRISIL is the market leader with 60% market share. SMERA is India’s first agency specializing in Micro, Small and Medium Enterprises (MSME) sector rating.

How is the credit rating derived?

Unlike personal credit score, business ratings are not available readily. You have to request vendors/agencies to provide the score. You are also required to furnish them with the relevant financial documents for the same. The process involved is:

  1. MSME requests the agency for credit rating
  2. MSME submits financial and managerial information to the agency along with a duly filled questionnaire
  3. The agency visits the site/office and also meets the management
  4. Agency performs a detailed analysis and industry research and prepares a draft report
  5. The proposed rating is presented to the Rating Committee
  6. Agency informs the rating to MSME
  7. MSME can appeal to the Rating Committee if required
  8. The final rating is published

Also Read : What Do You Choose To Grow Your Business? A Small Business Credit Card Or A Business Line Of Credit?

Why do you need business credit rating?

  • Authenticity: Being evaluated by a third party, it builds authenticity of your firm’s credit worthiness without any bias.
  • Access: All the lenders – banks and NBFCs – check the credit score before lending. A readily available credit rating ensures easy and quick access to business finance.
  • Cheaper loans: With a good business credit rating, you can avail business loans at cheaper interest rates. The collateral requirement also reduces.
  • Builds trust: Having a business credit rating creates a strong image among stakeholders – customers, and suppliers.
  • Competitive study: The rating helps to judge your financial position compared to the competitors.

When does personal score affect business loan?

Ideally, business loans do not have any impact on your personal finances. However, in certain cases, your personal credit score can affect your eligibility for a business loan. Here’s how:

  • A sole proprietorship firm: Because you are the only owner of the business, your credit history impacts your business finances.
  • First-time applicant: The personal credit score is also checked for other business types, like private limited, if the business is new.
  • Few financial transactions: Lenders and agencies cannot decide credit worthiness of your business due to insufficient transactions.
  • Delayed and missed loan payments: This is a red mark in your credit history. It can restrict you from getting a business loan.
  • Past record of bankruptcy: It stays in your credit history for 10 years. Lenders are reluctant to loan money to a business backed by such individuals.

Bottom-line

Ensure that you maintain a good business credit rating by repaying existing loans on time. Also, try to keep business and personal transactions separate. A healthy credit score is vital for you to avail business finance easily.

Apply for Business Loan Online Check your Business Loan Eligibility

How An Increase In Rates Affects Your Business

Every time the Reserve Bank of India announces the credit policy, it releases a lot of macro-economic data. Any indication of a hike or a cut can affect the functioning of a business if you rely on short-term or long-term borrowing. Understanding these effects can help you better manage your business.

Direct Effect

With an increase in the interest rate, there are a couple of prominent direct effects:

  • Cost of borrowing increases

An increase in the interest rate by RBI implies that the cost of borrowing for banks and non-banking financial companies (NBFCs) also rises. To cover these costs, the banks and NBFCs charge higher interest rates to their borrowers.

Businesses requires money to grow and expand. An increase in business loan interest rates deters them from borrowing more funds. Businesses would have to pay higher interest on existing loans as well. Thus, most businesses would shy away from borrowing.

  • Keeping your business in the green becomes difficult

Because of expensive financing options, you would have to reconsider your business expansion plans. Development of new projects could be stalled. Managing working capital could also become challenging. This can affect production lines and supply chain of goods. Thus, an increase in interest rate can cause a dent in your cash reserves leading to a decline in profits.

Also Read : All You Need To Know About Interest Rates For Small Business Loans

  • Measures to counter direct effects of rate variations

Managing outstanding payments and other expenses is likely to get difficult due to increased rates. It is, therefore, advisable to plan your expenses wisely while anticipating rate hikes. Begin with listing outstanding payments and receipts. Prioritize your payments. This could depend on the credit tenor or the cost involved in a case of delay.

Discuss with vendors if the credit period can be extended. On the other hand, try to secure money on time from the receivables. Request your customers to release the payment soon. Raise the invoices for goods/services delivered.

In the process of improving cash flow, keep a track of interest rate changes simultaneously. Avail a business loan during the low-rates period to fund your expansion plans.

Indirect Effects

Just like direct effect, an increase in the interest rates from RBI has some indirect implications as well. Increased interest rates result in a rise in customers’ interest outgo on credit cards, personal loans, home loans and so on. This leaves the customers with less money in their hands. Thus, their spending power reduces. During such times, people prefer to save money after spending the mandatory expenses. Thus, the demand for goods and services sees a decline. This decrease in sales affects the revenue of your business.

Gradually, as the customers get accustomed to the rate change. Eventually, the sales begin to increase. Besides, businesses offering products with inelastic demand remain unaffected most of the time.

Unlike direct effects, there is not much that you can do about the indirect effects.

Bottom line

Interest rates have the potential to control inflation. Thus, it is advisable to safeguard yourself against the effects beforehand.

One such measure could be to take a business loan during the low-rates period.

Apply for Business Loan Online Check your Business Loan Eligibility

FD-17-MAY-33_May22_BFLblog_Get interest rate of above 8_ on fixed deposits with Bajaj Finance_ed

Get an Interest Rate of Above 8% On Fixed Deposits with Bajaj Finance

Bajaj Finance has been among the most trusted names in the Indian finance industry for years now. It has earned its place among the market leaders in investment schemes by virtue of the stability, transparency, and dependability it offers its customers. And most importantly, Bajaj Finance looks out for its customers by offering one of the highest rate of interest on fixed deposit investments, along with various other features.

These features include a user-friendly online application process, availability of a Fixed Deposit calculator, huge network branches, and the flexibility to choose between a tenor period of 12 months to 60 months with a minimum deposit of Rs. 25,000. Above all, Bajaj Finance offers the chance to avail different interest rates on fixed deposits based on the type of customer applying. This means that you obtain a higher return if you belong to a certain category of customers. All you have to do is provide the basic documentation required and you can acquire an interest rate as high as 8.10%!

The Gateway To Achieving Your Dreams:

Bajaj Finance has tailored a rate of return on your fixed deposits that ensures you get the most out of your investment. Here’s some of the different brackets from which you can choose the one that suits you most:

If You Are A New Fixed Deposit Customer:

As a new customer, you are entitled to a cumulative fixed deposit rate of interest of 7.85%, which is much higher than most other banks or NBFCs. If, on the other hand, you choose to opt for the non-cumulative FD rate of interest, your rate of return depends on the when you would like your payouts, and the tenor period.

For example, if your tenor is between 3 to 5 years, your cumulative rate of interest will be 7.85%, while your monthly, quarterly, half-yearly, and yearly non-cumulative rate of interests will be 7.58%, 7.63%, 7.70%, and 7.85% respectively. Some of you may prefer to opt for the cumulative option in terms of safeguarding your money and also in order to receive greater returns.

 If You Are Bajaj Finance’s Loan Customer:

If you have previously taken a loan from Bajaj Finance, be it a car loan, a home loan, a personal loan or any of the other loan offerings, you get an additional 0.10% rate of interest on your fixed deposits. This means that your rate of interest can be as high as 7.95%. This offer is subject to a deposit size of up to Rs.1 crore.

If You Are Renewing Your Fixed Deposit:

Your loyalty to Bajaj Finance never goes unrewarded. Under its Fixed Deposit scheme, if you have already invested in an FD investment option at least once before, you can get an interest rate of 7.95%, subject to a deposit of up to Rs.1 crore.

If You Are An Employee of the Bajaj Group of Companies:

If you are a part of the Bajaj family, which includes Bajaj Auto Ltd., Bajaj Finance Ltd., Bajaj Holdings & Investment Ltd., Bajaj Electricals Ltd., Bajaj Allianz Life Insurance Company Ltd, Bajaj Allianz General Insurance Company Ltd., Maharashtra Scooters Ltd. and Mukand Ltd., you can also avail a rate of interest on your fixed deposit investments of up to 7.95%.

If You Are a Senior Citizen:

As a senior citizen, Bajaj Finance gives you the highest rewards to appreciate the value of depositing your savings. All you need to submit is proof of your age and you can avail a rate of interest of 8.10% on any deposits up to Rs.1 crore.

To start working on growing your earnings via Bajaj Finance FD account.

Know More about FD Interest Rates

Invest in Fixed Deposit

Thank You For Taking Care Of Us Doctors, Now It’s Our Time To Serve

Doctors are rightfully called as real-life superheroes, as they save lives and are responsible for the increase in life expectancy. The work done by doctors alongside researchers to develop cures for new diseases has altered the course of medical history. On this doctor day, Bajaj Finserv would like to serve doctors by helping their practice reach new heights.

To help professionals like doctors to grow and expand their practice, we are offering an exclusive loan for Doctors.

Doctors Require Financial Support

Salaried doctors tend to wish about setting up their own practice. It also gives them the autonomy to make decisions regarding their patients and run a successful business. But several steps need to be followed to set up a clinic and this requires a lot of capital. Leasing an office space, equipment and licensing costs a lot of money and doctors may require financial help in this situation.

For those who have their own practice, the cost of renovating can be expensive. These include adding more hospital beds, air conditioning, state-of-art equipment and ambulances. To manage these expenses, Bajaj Finserv’s Doctor Loan can help, as it does not require a guarantor or collateral.

Benefits of Doctor Loan

Bajaj Finserv’s Doctor Loan has several advantages:

  • Business loan up to Rs. 30 lakh.
  • Home Loan for Doctors up to Rs. 3 crore
  • Loan Against Property up to Rs. 3 crore
  • Attractive low-interest rate
  • Flexible repayment tenor options ranging from 12 months to 20 years.
  • Flexi Loan – You are assigned a sum credit and you only pay interest on the amount used.
  • Negligible or nil prepayment or foreclosure charges.
  • Quick approval and disbursal of the loan amount.

All these advantages will greatly benefit a medical professional for setting up a practice, expanding it or purchasing new equipment. If doctors are able to avail a loan or capital quickly, they too can achieve their goals in the shortest time possible.

However, a doctor might need to fulfill certain criteria and documentation requirements before availing the loan.

Also Read : Planning To Apply For A Doctor Loan? Check Out Your Eligibility And Required Documentation

Eligibility and Documentation Requirements

Graduate doctors require a minimum of 2 years of post-qualification experience, while post-graduate doctors will require a minimum of 1 year of experience at a clinic or hospital.

To avail a Doctor Loan, one must be a medical practitioner with a degree from a recognised institute. Loans are not given to new graduates, as it is advisable to have a few years of practice before setting up your own clinic.

Your credit score may be checked before a loan is sanctioned, hence PAN card and other government issued identity cards are necessary. If all your documents are in order, loan will get approved within 24 hours and the money would be credited in your bank account at the earliest.

To sum it up

Doctors play a vital role in the society and their contributions must always be acknowledged. To ensure that the healthcare sector continues to grow exponentially and that doctors achieve their goals, they can consider taking a Doctor Loan from Bajaj Finserv.

Apply for Doctor Loan Online Know More About Doctor Loan

Features and benefits of Chartered Accountant Loan

Are you a Chartered Accountant? Are you looking to expand your business or set up a new one? Bajaj Finserv offers an exclusive loan for Chartered Accountant with multiple benefits along with quick approvals and a low rate of interest.

Apply for CA Loan

Start your own medical practice with Doctor Loan

If you are a Doctor looking to set up your own clinic or buy new equipment or machinery, then Bajaj Finserv has a customized solution for you in the form of Doctor Loans. Know more about the eligibility, fees, and the documentation requirements to make your loan process easy and quick.

Apply for Doctor Loan

Impact of GST on Home Loan


Looking to buy a house, but worried about how the GST will impact the price of your house, and your home loan? We break it down for you in this short video.

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