India Union Budget 2019: Finance Minister Piyush Goyal on Friday made announcements to revive the lagging real estate sector.
Budget 2019: Finance Minister Piyush Goyal on Friday made announcements to revive the lagging real estate sector. Among the many measures, the government extended the benefits under Section 80-IBA of the Income Tax Act for one more year.
It applies to the projects approved till March 31, 2020. The budget 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.
“Three key buckets of changes proposed (1) higher personal disposable income due to higher tax rebate for up to 5 lacs (2) higher rural disposable income because of farmers package, interest subventions etc (3) real estate and housing sector proposals like no notional tax on second home, capital gains tax exemption for 2 homes and no notional tax for unsold real estate inventories up to 2 years – all these three buckets of changes are potential game changers for entire economy and Consumer sector in particular,” said Paresh Parekh, Partner, Leader Consumer & Retail Tax, EY on the impact on Consumer sector.
Piyush Goyal also rolled over the benefits of capital gains for the sector in the budget speech. He said: “The benefit of rollover of capital gains under section 54 of the Income Tax Act will be increased from investment in one residential house to two residential houses for a tax payer having capital gains up to Rs 2 crore. This benefit can be availed once in a life time.”
LTCG exemption under section 54 available on ‘2’ residential houses for gains upto Rs. 2 cr. This change is meant to address the concerns of the parents who want sell the existing house and by two smaller houses for their children. Earlier this led to a limitation on claim of LTCG exemption upto ‘1’ new residential house property. However, in order to limit the misuse of this benefit, the benefit can availed only once in lifetime,” Rakesh Nangia, Managing Partner, Nangia Advisors LLP said.
The TDS threshold for deduction of tax on rent has also been proposed to be increased from Rs 1,80,000 to Rs 2,40,000 for providing relief to small taxpayers in the budget.