Budget 2019 Gets Real Estate Excited
India's real estate sector has a reason to cheer as Finance Minister Piyush Goyal has announced a range of sops for real estate developers as well as homebuyers in the Interim Budget, presented on February 1. These measures are expected to boost affordable housing as well as investor sentiments in the near future.
Here are some of the key announcements of Union Budget 2019.
- FM have proposed to extend the period of exemption from levy of tax on notional rent on unsold inventories, from one year to two years from the end of the year in which the project is completed.
- Section 80IBA of the Income Tax Act specifies that the profits and gains derived from affordable housing project approved after 1st June 2016 is hundred percent deductible. The FM has extended the benefit for one more year that is to the housing projects approved till March 31, 2020.
- Government has recommended GST council for reducing GST rates for homebuyers.
- Currently, income tax on notional rent is payable if one has more than one self-occupied house. FM has announced to exempt rental income from income tax. This could boost the second home market to some extent.
- Individual taxpayers having taxable income up to Rs 5 lakh will get full tax rebate while the ceiling of payment of gratuity has been raised to Rs 20 lakh. The standard deduction has been raised to Rs 50,000. This is a major boost for affordable housing buyers.
- The benefit of rollover of capital gains under section 54 of the Income Tax Act has been increased from investment in one residential house to two residential houses for a tax payer having capital gains up to Rs 2 crore. However, this benefits can be availed once in a lifetime.
Here's what real estate stakeholders has to say about Union Budget 2019
Nimish Gupta, MD, RICS South Asia
"We expect that the real estate and construction sector to grow significantly in light of the changes. The RERA and the Benami transactions Act have already resulted in wider semblance in the market on the back of increased transparency. We are encouraged with the focus extended to the promotion of rental housing, with the TDS threshold on rental income raised from Rs 1.8 lakh to Rs 2.4 lakh."
Anil Saraf, CMD, ASF Group
"The Interim Budget has focussed on the right areas to alleviate the stress on the housing sector and boost demand for housing units. The series of sops for both buyers and developers should help perk up sentiment in the sector that has been going through a sluggish phase with inventory piling up across the country. It is now expected that buyers with investible surplus will re-enter the market to purchase houses."
Surendra Hiranandani, Founder & Director, House of Hiranandani
"The decision to eliminate tax on notional rent on second self-occupied house is a welcome move. This will prep up demand for second homes substantially. The FM has brought about substantial improvements in both personal income and capital gains. This is extremely positive as compared to the slow incremental reforms of the past."
RK Arora, Chairman, Supertech
"We are very happy to hear of the proposals to extend the time limit for completing affordable housing projects to earn a tax holiday under Section 80IBA. This will bring a much-needed breather for some projects which have struggled to complete for various reasons."
Rohit Poddar, MD, Poddar Housing and Development
"This is a positive feel-good Budget, which was expected given the 2019 Elections. Enhancing the ease of living and consolidating the real estate sector will further provide people with a comprehensive social security and strengthen the government's vision to make India a $10-trillion economy."