Budget has proposed several tax sops to incentivise purchase of second homes, and also announced relief for realty firms by extending tax rebate on development of affordable housing until next fiscal and not charging tax for two years on notional rent of unsold units.
To give impetus to the sluggish housing sector, the Budget has proposed several tax sops to incentivise purchase of second homes, and also announced relief for realty firms by extending tax rebate on development of affordable housing until next fiscal and not charging tax for two years on notional rent of unsold units.
According to Sunil Rohokale, managing director & CEO, ASK Group, there will be an increase in disposable income in the hands of the individuals earning up to Rs5 lakh and up to Rs6.5 lakh with specified investments. “In case of a couple earning, this implies an income of Rs10-12 lakh i.e. Rs1 lakh per month. This will help boost demand for first-time homebuyers for the affordable to mid-housing segment,” he said.
Also, for an individual having a slightly higher taxable income, buying a house could be a good option, as after accounting for deductions on interest on housing loan as well as increase in standard deduction from Rs40,000 to Rs50,000, the overall taxable income could come down to Rs5 lakh, making the taxpayer eligible for the new tax rebate announced. JC Sharma, vice-chairman and managing director, Sobha Limited, said, “These steps will help increase savings in the hands of the middle class. We believe that such savings will flow into buying residential space, as it has better shelf life and gives higher and assured returns.”
Ashish R Puravankara, managing director, Puravankara Limited, said: “Increased savings bring people closer to their aspiration of becoming home owners. This augurs positively for the affordable housing segment.”
Further, the TDS threshold for deduction of tax on rent is proposed to be increased from Rs1.8 lakh to Rs2.4 lakh for providing relief to small taxpayers. Ramesh Nair, CEO and country head, JLL India, said: “For buyers, no tax on notional rent on second self-occupied home, no TDS on rental income up to 2.4 lakh per year will prove to be a big impetus for the sector.”