Mumbai: The realty industry has welcomed the interim budget saying the many tax proposals will give the needed fillip to the sector that has reeling since the past two years with severe liquidity crisis and demand slowdown. The budget seeks to extend tax sops for affordable home developers and to remove the tax on notional rent for a second housing unit as well as unsold units. It also seeks to extend the benefits under Section 80-IBA of the Income Tax Act for one more year–to housing projects approved till March 2020, which will boost supply of affordable housing.
According to property consultants, there are about 6-7 lakh of unsold units with developers in seven-eight major cities alone. The benefit of rollover of capital gains up to Rs 2 crore under section 54 of the IT Act will now be available for investment in two houses from the present only one unit.
It also proposes to enhance the TDS deduction threshold for rent to Rs 2,40,000 from Rs 1,80,000 now. Credai’s Getamber Anand said the proposal to lower GST on homebuyers is extremely encouraging. He also welcomes the two-year exemption from notional rent on unsold inventory.
The general exemption of income tax up to Rs 5 lakh will benefit 3 crore taxpayers is likely to increase the demand for affordable and mid-income housing segments, JLL India’s Ramesh Nair said. Credai-MCHI’s Nayan Shah said overall the brings a lot of relief for the mid income taxpayers and some long awaited cheer to the real estate industry.
Credai’s Jaxay Shah said higher tax exemption will increase the purchasing power, while CBRE India’s Anshuman Magazine said the budget lays equal emphasis on key aspects such as ease of living, infrastructure, public health, technology and better living.
Though implementation will be the key here, it is definitely a step in the right direction. Surendra Hiranandani of House of Hiranandani said the move to eliminate tax on notional rent on second selfoccupied house will prep up overall demand substantially.
Terming the budget as a balanced one for the real estate, Anarock Property Consultant’s Anuj Puri said the budget has tried to cater to all the three categories including the developers, the tax payers and the investors. The interim budget proposes full tax rebate for middle income people earning up to Rs 5 lakh.
Also, if one invests in specified government saving schemes then the tax exemption goes up to Rs 6.5 lakh. Knight Frank’s Shishir Baijal sees a fair amount of savings from the tax giveaways being channelised towards the real estate. Also, increasing the number of self-occupied properties to two will augment homes sales.
PropTiger’s Ankur Dhawan said the extension of Section 80IBA for one year, no interest on notional rent till two years of project completion, reinvestment of capital gains in two houses rather than one and no tax on notional rent for two self-occupied houses, will have much stronger impact on sales especially for affordable housing buyers. The government is not only giving credit linked subsidy scheme to home buyers but also leaving more money in the hands of the owner to pay EMIs through increased tax savings, he said