The real estate sector, which was hit by the government’s demonetisation
drive, got the much needed boost in the Union Budget 2017-18. Here are some of
the key highlights pertaining to the real estate sector and their impact:
Infra status
The Affordable Housing sector has been granted the Infrastructure Status
which has been a long time demand from the industry. This is in line with the
Prime Minister 's vision of providing Housing for All by 2020. Giving an
infrastructure tag to such projects would attract more investors. It would mean
developers would have access to cheaper funding and thus addresses issues that
private players in this segment face.
Loan refinance
National Housing Bank will refinance individual loans worth Rs 20,000
crore in 2017-18. This will give a major push to affordable housing companies.
Tax exemption
The Government has also proposed 1 year tax exemption from notional
rental income from unsold inventory. This would help especially those holding
real estate inventory/ stock. This is a great move to providing tax relief to
developers in the residential sector where the sales have significantly dropped
post demonetisation move.
Capital gains on JDA
Capital gains on Joint Development Agreement is to be taxed only when
the project is completed. This would provide a great boost to unlocking land
for development and reduce litigation.
Reduction in holding
period
In case of Long term Capital Gains from Immovable properties, the
holding period has been reduced from 3 years to 2 years to qualify for benefits
of long term capital gains providing respite to investors.
Base year change
The base year for calculation of Indextation for long term capital gain
shifted from 1981 to 2001. As a result of this resultant gain would reduce
& in turn lower taxation.
PMAY get huge boost
The Government has allocated Rs 23,000 crore for the Pradhan Mantri Awas
Yojna (PMAY) to propose to complete one crore houses by 2019 for those living
in kachha houses.
Increase in size of
affordable housing
In the last budget, the government provided 100% tax exemption on
profits, for developers building homes with Built up area up to 30 sq meters in
the four metros and up to 60 sq meters in other cities. The Government stated
that instead of built up area, carpet area would be applicable.
Home loan rates
Rate of interest on housing loan to further come down.
Reduction in tax rate
For individuals, the income tax rate is reduced from 10% to 5% for tax
slab between Rs 250,000 to Rs 500,000 which means any person whose income is up
to Rs. 5 lacs, the tax liability will be halved. Any person whose income is
above Rs. 5 lacs would have a net tax saving of Rs. 12,500.
Cash ban
It recommended a total ban on cash transactions of Rs 3 lakh and above.
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