The Government of India has made
its final presentation about the Union Budget of the session. The Union Budget
has received some big news, acknowledging torpidity in the real estate sector
that has been struggling with shallow growth over the past few years. The
government has made some important disclosures that will provide the necessary
ease to the common people. , Including home buyers as well as builders. This is
an interesting budget, in which the government has tried to help the industry
to control the decline in the real estate industry.
The realty sector that changes key are:
Exemption of TDS
The proposal to reduce GST on homebuyers is very helpful. Under the current Income Tax Act (Sec-194L), a person who is responsible for paying rent, has to deduct TDS on the amount paid if he passes more than Rs 1 lakh 80 thousand during a financial year. The Interim Budget 2019 proposed to increase this exemption limit from Rs 1 lakh 80 thousand to Rs 2,40,000 for a year. This step will be very useful for property owners who rent their property for business as they will receive higher rental income which will doubtless be deducted as tax. The move may entice more investors to buy a second home.
Demonetization rent
According to current regulations,
when a person owns several residential homes, they can now choose one of them
as "self-occupied" and the other will be seen as renting by default.
Prior to this, no one would have to pay any tax on the
"self-occupied" property, but the other would be charged the same as
the house that was rented.
With this move, the government
has tried to increase second home sales by meeting the criteria for genuine
self-occupiers who already own a house. For self-occupied second homes, where
families are living, consumers do not have to pay any tax on the rental income.
On the other hand, for the real
estate industry, where flats / apartments serve as its index, the tax exemption
on constitutional rent was proposed to be increased from 1 year to 2 years.
This means that builders or developers will not have to pay any outstanding
interest on their untax properties for a period of two years, for a period of
two years after the completion of the project.
Income tax per year Rs. 5 Lakh
As per the Budget 2019 proposal, salaried employees with an income of up to Rs 5 Lakh per year will be exempted from income tax, and if they avail the 1.5 Lakh exemption available under 6.5 Crore per year, then earning 6.5 Lakh per year. Employees with the same will be exempted. Income Tax Act. However, tax rates have been retained. The proposal to give tax exemption for income up to Rs.5 Lakh will help in increasing the budget of the home buyer and may also provide for the demand of housing.
The new standard deduction limit, which is Rs 40,000 as per last year's budget, has been increased to Rs 50,000.
LTCG discount
Under Section 54 of the IncomeTax Act, the benefit of saving capital gains will increase from an investment
in a residential house to a capital gain of up to two crore rupees for a
taxpayer in two residential houses and this benefit can be availed only once in
a lifetime.
Tax Benefit Expansion on "Housing for All by 2022"
Section 80-IBA was added on 1
April 2017 of the Income Tax Act to allow a 100% deduction on any profits or
gains from the business of developing and building. This benefit is
proposed to be extended for one year now, that all housing projects to be
registered and approved under the Real Estate Regulatory Act by 31 March 2020.
The move will force builders to develop more and more affordable housing projects
but this tax exemption proposal is directed at setting limits based on the
location of the house and the carpet area.
An interest grant on a home loan
of 4% will be provided for housing loans up to Rs 9 lakh, with an income of Rs
12 lakh per year and a rebate of 3% on home loans up to Rs 12 lakh for those
earning Rs 18 lakh. Last year has already been offered in the interim budget
last year to improve housing demand benefiting homebuyers.
The conclusion
Apart from this, the above
changes which have a great impact on the real estate sector, other proposals
are those that give tax exemption to individual taxpayers whose annual taxable
income is Rs 5 lakh and for a salaried employee from Rs 40,000 in standard
deduction amount. There will be an increase of up to Rs 50,000 Profitable
investors.
