Honourable Finance Minister of India Mrs. Nirmala Sitharaman has tried to reinvigorate real estate in this Budget 2020. All focus is on creating vibrant and dynamic economy, supported by technology.
Housing for All by 2022 has already set a pathway to achieve stability in housing by PMAY, Tax Sops, GST rates cut down & Rs. 25,000 Cr fund for residential projects. PMAY (Pradhan Mantri Awas Yojana) has already sanctioned over 81 Lakhs houses under its Urban Scheme.
RERA & GST has helped real estate to promote with transparency and providing a drive consolidation in the sector. To boost housing sector and infrastructure, GOI rationalised the GST rates of cement from 28% to 18% giving significant relief to the sector.
Real estate sector contribute about 8% to the total GDP of India and stand at 2nd position in providing employers in country.
Anticipated revival measures for real estate in Budget 2020 are as follows:
- Affordable housing scheme will remain in force till March 2021 ( benefit under section 80EEA)
Union Government of India in Budget 2019 had introduced tax benefit for affordable home buyers under section 80EEA, with deduction up to Rs. 1.50 lakhs against interest payment, which was valid up to March 31st 2020.
In Budget 2020, GOI has extended the Tax Benefit on affordable house (valued up to Rs. 45 Lakhs) availed by additional deduction of upto Rs. 1.50 Lakh for Interest paid on sanctioned loans by an additional 1 year till 31st March 2021.
Thus, for one more year the total tax deduction available on such interest paid stays at Rs. 3.50 Lakhs.
- For Affordable House, Govt. has defined a max. ceiling value of Rs. 45 Lakh for :-
i.) 90 SqMtrArea (Non-Metropolitan Area)
ii.) 60 SqMtrArea (Metropolitan Area)
- Extension of 1 Year in Tax Holiday for Real Estate Developers:
To boost affordable housing, the date of approval of tax holiday provided on the profits earned by developers of affordable housing is extended by a year. Applicable on projects which were approved by the competent authority during the period of June 1, 2016 to March 31 2021.
- Tax Concession on income from capital gain, business profits & other sources in respect to real estate transactions:
Previously if the Consideration Value (also known as Sale Consideration) is less than Circle Rate (value adopted by the stamp valuation authority) by more than 5 %, then their difference is counted as income for both Purchaser & Seller.
To trigger investors in market and fight cash crunch, Finance Minister has proposed to increase the limit of 5% to 10%.
The provision of capital gain tax paid is now applicable only if the difference is above 10%, as against 5 % previously.
India’s property industry thrives for better prospects of recovery from this progressive budget which is providing much needed impetus to the housing segment. Budget 2020 will help in recovery of Indian economy by creating arise in pent-up domestic housing demand and pushing more 1st time home buyer to enter the market.
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