Key benefits of the Budget 2019 for the Real Estate sector

The Union Budget is a statement of estimated receipts and expenditure of the Indian Government for that particular year. This gets released on 1st of Feb every year so that it can be materialised before the commencement of new financial year (1st of April). The Union Budget of 2019 just got released with various updates to the previous Budget by Mr. Piyush Goyal.

TheHousemonk will be highlighting some of the key changes that has been done in favor of the real estate sector along with the key people who will benefit from it.

ADVANTAGES FOR PROPERTY OWNERS

1) EXCEPTION FROM NOTIONAL RENT FROM 1st SELF OCCUPIED HOUSE

Previously:

  • If you own 2 or more properties, you are liable to pay income tax on the notional rent from all properties except the 1st one (Even if they are occupied by self or kept locked)

Now:

  • Property owners won’t have to pay tax on the 2nd property (Deemed to be self-occupied) till March-2020

2) TDS THRESHOLD INCREASE TO Rs.2.4L

Previously:

  • Tenants of properties (in non-residential dwellings) need to deduct and remit TDS if the annual rent higher than Rs. 1.8 Lakhs

Now:

  • Tenants of properties need to deduct and remit TDS only for those properties with annual rent higher than Rs. 2.4 Lakhs

3) SECTION 54 INCOME TAX EXTENDED TO 2 PROPERTIES

Previously:

  • Under section 54, when a property owner sells a real estate asset, the capital gains tax can be deferred if the owner re-invests the money into another real estate asset. This provision could be used only once in a lifetime

Now:

  • This provision can be availed even if the owner is using the proceeds to buy 2 properties instead of 1 (Limit of Rs. 2Cr applicable on sale value)

FOR REAL ESTATE DEVELOPERS

1) EXEMPTION IN LEVY OF TAX ON NOTIONAL RENT FOR UNSOLD INVENTORY FROM 1 TO 2 YEARS

Previously:

  • The Real estate developers need to pay a notional tax on their unsold inventory after 12 months from the date of completion of their project

Now:

  • The grace period for availing this exemption has been extended from 12 months to 24 months.

FOR HOME BUYERS

1) INCENTIVES TO BUY AFFORDABLE HOUSING UNDER SEC 80-IBA

Previously:

  • Exemption from Capital Gains tax for people buying an affordable house under Sec 80-IBA was applicable only if projects were approved between 2017 till 2019. Basically, this exempts home buyers from 100% of the capital gains they might reap from investing in affordable houses

Now:

  • This facility has been extended to projects which get approved before 31-Mar-2020

Table of Contents

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