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Interim budget 2019: Benefits for Home Buyers

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Interim budget 2019: Benefits for Home Buyers

Last updated: February 24 2019
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  • #21

    #21

    Re : Interim budget 2019: Benefits for Home Buyers

    Interim budget 2019: Decoding Piyush Goyal’s gift to homebuyers, real estate sector

    In its interim budget, the government has proposed a number of tax sops that may lure people to buy a second house. It has also announced relief to real estate developers by extending a tax rebate on the development of affordable housing till the next fiscal.


    The property sector, which has been facing a number of multi-year demand slowdown, especially with dipping sales, may benefit significantly from the yesterday’s proposals. (Photo: Reuters)
    HIGHLIGHTS

    Interim Finance Minister Piyush Goyal has proposed a number of tax benefits for the real estate sector in affordable housing category. Experts expect the proposed measures to boost property sales across the country.

    The property sector, which has been facing a number of multi-year demand slowdown, especially with dipping sales, may benefit significantly from the yesterday's proposals.

    In its interim budget, the government has proposed a number of tax sops that may tempt people to buy a second house. It also announced relief to real estate developers by extending a tax rebate on the development of affordable housing till the next fiscal.

    A proposal was further announced to drop tax charges for two years on notional rent with regards to unsold properties. Besides, the government has also proposed a number of income tax sops for small and middle-income taxpayers.

    Having said that, here is all you need to know about the benefits proposed by FM Goyal in interim budget 2019:

    Own 2 self-occupied houses? Don't worry about tax

    Individuals who own up to two self-occupied properties do not have to pay any notional rent tax on them.

    "Currently, income tax on notional rent is payable if one has more than one self-occupied house. Considering the difficulty of the middle class having to maintain families at two locations on account of their job, children's education, care of parents etc. I am proposing to exempt levy of income tax on notional rent on a second self-occupied house," said Goyal during his budget speech.

    Anuj Puri, Chairman, Anarock Property Consultants Pvt Ltd, said: "Exemption of notional rent on the second self-occupied house will provide additional savings in the hands of the second home buyers and may also boost the investor activity in the real estate sector."

    For instance, if a person has three houses (One where he/she lives and two other self-occupied properties), only the third house will attract a rent tax.

    Experts said the move will offer room to save more on housing taxes. Many people would also seek options to buy houses after the rollout of the new benefit, said experts from the property sector.

    TDS threshold for tax deduction on rent hiked

    The tax deducted at source or TDS threshold for deduction of tax on rent has been proposed to increase from Rs 1,80,000 to Rs 2,40,000 for providing relief to small taxpayers.

    Experts said such a move would provide major relief to small taxpayers and may also drive up sales of affordable housing. It will also provide administrative relief to small taxpayers (landlords).

    Capital Gains benefit on 2 housing investments

    The government has also proposed rollover of capital gains up to Rs 2 crore towards buying (investing) two houses compared to only one under the present one unit only.

    Under Section 54 of the Income Tax Act, the rollover benefit can be availed once in a lifetime. It is expected to lure many individuals to purchase more than one house, thus driving up real estate sales.

    Tax benefits to developers on housing projects

    An adidtional tax benefit for affordable housing developers to boost affordable housing in India was also proposed by the government in its interim budget.

    "For making more homes available under affordable housing, the benefits under Section 80-IBA of the Income Tax Act is being extended for one more year to the housing projects approved till March 31, 2020," said Goyal during his budget speech.

    This essentially means that projects under Section 80-IBA will offer 100 per cent deduction of profits to an assessee engaged in developing affordable housing projects.

    Relief for housing developers

    A proposal was also made to extend the period of exemption on levy of tax -- on notional rent related to unsold properties - to 2 years from the date of project completion, compared to just one year under present norms.

    "The period for taxing unsold inventory has been extended up to two years. This is a welcome move and will boost the housing sector as currently there are around 85,000 ready units (of 6.73 lakh unsold units) which are unsold across the top 7 cities of India," said Anuj Puri of Anarock Property Consultants.

    Not just Puri but a host of property consultants admitted that there are about 6-7 lakh unsold units lying with real estate developers in top major cities due to poor demand. The proposal is expected to bring much-needed relief to such developers.

    Income tax rebate

    Though not directly related to the real estate sector, the proposal to offer a full income tax rebate to small and medium-scale taxpayers will have a significant effect on the property sector, according to experts.

    The government in its interim budget proposed to give a full income tax rebate to those with net taxable income up to Rs 5 lakh.

    Unaddressed issues

    Despite the announcements, several homebuyers and stakeholders in the real estate sector are unhappy.

    There were no annoncements in relation to the non-banking financial corporation deadlock, which continues to trouble the real estate sector.

    No announcement was made with regards to the creation of stressed fund asset for lakhs of pending housing projects. Many homebuyers in the country are upset over unfinished projects running into years due to promoters or developers running out of funds.

    While the industry was expecting the government to announce a reduction in GST on the purchase of properties, no actual relief was proposed.

    "All in all, it is a tame budget clearly configured as a crowd-pleasing electoral pitch and a cursory nod towards the ongoing challenges in the economy. This is no more and no less than what was expected," added Puri.












    https://www.indiatoday.in/business/u...425-2019-02-02
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    • #22

      #22

      Re : Interim budget 2019: Benefits for Home Buyers

      The GST Council brought much needed relief to home buyers by slashing tax rates on under-construction housing properties to 5 per cent from the existing 12 per cent.
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      • #23

        #23

        Re : Interim budget 2019: Benefits for Home Buyers

        The GST Council cut down the GST rates on affordable housing to 1 per cent from the current 8 per cent.
        Last edited February 24 2019, 08:26 PM.
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        • #24

          #24

          Re : Interim budget 2019: Benefits for Home Buyers

          In Win For Home-Buyers, Centre Cuts Tax On New Houses Ahead Of Polls

          The GST Council also decided to lower the tax rate on affordable housing projects to 1 per cent from 8 per cent.

          All India | Reported by Alisha Sachdeva, Edited by Divyanshu Dutta Roy (with inputs from Reuters) | Updated: February 24, 2019 20:18 IST

          House built on an area of 60 square metres will now be categorised as affordable housing.

          New Delhi: Highlights

          The centre on Sunday announced a cut in the goods and services tax charged on sales of residential properties under construction in a move certain to find favour with middle class voters ahead of elections later this year.

          The Goods and Services Tax Council, comprising state and federal finance ministers, announced that the new rate will be 5 per cent, down from 12 per cent, on all new housing projects except those that are classified as affordable housing, according to a statement from the finance ministry.

          The council also decided to slash the tax rate on affordable housing projects to 1 per cent from 8 per cent, the statement said after a meeting in New Delhi on Sunday.

          "This will give boost to housing for all," Finance Minister Arun Jaitley said in a Twitter post.

          Prime Minister Narendra Modi's BJP has been seeking to stimulate the economy as he faces a general election by May.

          Concerns about low farm incomes and weak jobs growth have undermined his standing with voters.

          Last month, the government announced a change in national sales tax rules that would exempt about 20 lakh small businesses from payment of tax.

          The residential sector in some parts of the country has been in a torpor following the failure of some property developers.

          In and around the capital New Delhi, for example, there are many half-completed properties

          Home buyers put deposits down on many of the apartments only to see the developers fail or, in some cases, commit fraud.

          The GST Council has revised down tax on hundreds of goods and services in the past 18 months.

          The council also altered the definition of affordable housing for India's secondary and smaller cities.

          For non-metro cities, any home built on an area of 90 square metres and below would be categorised as affordable, up from the current 60-square-meters cap, according to the finance ministry.

          The 60-square-meters ceiling remains for homes in metro cities.

          The property also has to be Rs. 45 lakh or below to qualify as affordable.

          The statement specified that the council would classify New Delhi, Mumbai, Kolkata, Chennai, Bengaluru and Hyderabad as its metro cities.

          The GST council, the statement said, specified that builders, who utilize the lower rate will not be able to get a refund of input tax. The new rates will be applicable from April 1.

          Home buyers had complained that builders were not passing on the benefits from the refunds of input tax credit to them.

          Input tax is essentially credit received by the builders on payment of taxes on building materials such as cement

          "This decision ahead of the elections could provide some relief to home buyers," said Abhishek Kumar, president of a homebuyers association.

          (With inputs from Reuters)






          https://www.ndtv.com/india-news/tax-...ouncil-1998572
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