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Union Budget 2021 For the Residential Sector

The dynamics of the real estate sector and stakeholders have seen notable impacts caused by the Covid-19 pandemic; However, industry experts expect the 2021 budget to pave the way for opportunities and recovery. Expectations from The Finance Minister Nirmala Sitharaman’s 2021 budget are very high.

Builders & Developer expect the budget in 2021 to introduce reforms such as tax cuts and price corrections that will provide numerous benefits and stability in the industry.

The 2020 economic survey, presented by FM on Friday, boosted GDP growth to 11% in FY22. The budget includes a detailed statement of the estimated income and expenditure that the government can incur in the financial year.

New Measure & Laws to Upgrade the Residential Sector

Hike in Circle rate

As per the latest update for only primary sale of residential units of value up to Rs 2 crore, the centre has decided to increase the differential rate between the circle rate and the agreement value from 10% to 20%. Both developers will be allowed to launch a large generation of unsold inventory worth more than 2 million, said Kaushal Agarwal, Chief Real Estate Advisor for Custodians. Stamp duty for the purchase of land in affordable homes should be reduced or eliminated in the next few years to facilitate the launch of such homes,” said Pradeep Aggarwal, Founder, and Head of Signature Global Group.

Rent

The period of freedom from levy of tax on notional rent, on unsold inventories, needs to be extended to 3-5 years from two after receiving the occupation certificate.

Credit Linked Subsidy Scheme

To assist and support the residential buyers, we require the Government to increase the Credit Linked Subsidy Scheme (CLSS) for the middle-income group as well. The industry also requires to increase both, 100 percent tax deduction under section 80 IBA as well as the further tax deduction of up to Rs 1.5 lakh for fascinating payments on housing loans prepared for the affordable housing scheme, at least by a year till the market stabilizes," says Murali Malayappan, chairman & MD, Shriram Properties.

The deadline for the credit-linked subsidy scheme (CLSS) should be extended by two years up to 31st March 2023. Additionally, given the relatively higher house prices in major cities, the upfront amount of the CLSS subsidy should be increased to INR 3.5 lakhs (from the current level of Rs 2.3-2.67 lakhs depending on the income category) with identical enhancement in income criteria which shall make the subsidy amount more significant in comparison to the house value," says Baijal.

Income Tax

"On housing requirements, the Article 80C tax deduction on house principal payments does not provide for a special housing allowance. A separate annual discount of INR 150,000 will provide that amount. What is needed to decide on a house purchase," said Shishir Baijal, President. and CEO of Knight Frank India.

To stimulate demand and relieve home buyers, we are planning tax cuts for them such as changing the limit from Rs. 2 million becomes the higher amount of home loans under Section 24 (b) of the Income Tax Act. This will result in greater savings and help offset premium stock. Estimate of 45 lakhs for a higher figure in taken into account for land and construction prices in the metropolitan city”, said Ravindra Pai, MD, Century Real Estate.

Affordable Dwelling Units

Technology import for the development of affordable housing from additional countries should be free from custom duty. Moreover, GST on material & services utilized in affordable dwellings should be decreased to 50% or brought to a single digit, says Pradeep Aggarwal. These Rules & Laws are imposed to increase the business in the real estate industry which will in turn result in economic growth of the country. CSSOS Officers Enclave is inviting JV partners to earn the maximum possible profits at minimum risks. To know more visit www.officersenclave.org

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