Finance minister Nirmala Sitharaman presented Union Budget for the fifth consecutive time, and it had major share for the real estate sector. However, some announcements are primarily focused on the sector while the industry will have the advantages secondarily. After the wave of uncertainty, the nation is standing strong to conquer challenges like employment, infrastructural development, and economic upliftment to be precise.
The Indian real estate was looking optimistically to the budget as it was the last full-fledged budget of the Modi Government’s second term. Here is the detailed list of what the Government has to offer the Indian real estate.
Increase in Expenditure to Pradhan Mantri Awas Yojna
Government’s major impetus has been ‘Housing for All’ for the achievement of which the Government has increased the expenditure of Prdhan Manrti Awas Yojna (PMAY) to Rs. 79,000 crores which is 66% high of the present cost.
Finance Minister proposes amendment to calculate Capital gains
FM Nirmala Sitharaman proposed an amendment to calculate Capital gains if the property is developed as a joint venture for the inclusion of the amount received through cheque etc. as consideration.
Finance Minister tabled Interest paid can be claimed as Deduction
The interest paid on the borrowed capital for the purpose to purchase or renovate the property can be claimed as deduction from income. However, the same can be availed under special circumstances. The interest can also be a apart of the cost of acquisition or improvement on transfer, thus diminishing capital gains. However, it is proposed that the charge of acquisition or improvement shall not include the amount of interest claimed earlier as deduction.
Enhanced targeting of tax concessions and exemptions
Finance Minister Nirmala Sitharaman also recommended cap deduction from capital gains on investment in the residential property under Section 54 and 54F to Rs. 10 crores.Â
Exemption to Development Authorities
Another proposal by the finance minister states the provision to exempt any income ascending to a body/authority/ board/trust/ commission (on profit organization) formed either under the Central or State Act for the aim of sustaining the need for housing or for planning, development, or improvement of cities, towns and villages or for regulating any activity or matter, irrespective of whether it is carrying out any commercial activity.
Finance Minister focused on Getting Cities ready for Municipal Bonds
All cities will be yield incentives on the advancement of their credit value to get municipal bonds. This process will be conducted through property tax governance reforms and ring-fencing user charges on urban infrastructure.
Non-Banking Financial Companies (NBFCs)
Finance minister also proposed amendment, because of the alteration in the segregation of non-banking financial companies by the Reserve Bank of India (RBI), some new amendments are proposed so to make all NBFCs fall in the same line.
Finance Minister Prioritizes Sustainable Cities for Future
The Government is determined to create sustainable future for which both, States and Cities will be stimulated to work on urban planning reforms and actions. These actions will transform cities into ‘sustainable cities of tomorrow’. For the achievement of the foal, it is pivotal to make efficient use of land resources. Also, adequate resource for urban infrastructure, transit-oriented development, enhanced availability and affordability of urban land, and opportunities for all is necessary.
Creation of Passage for Private Investment in Infrastructure
The guidance from the recently founded Infrastructure Finance Secretariat will to all stakeholders for more private investment in infrastructure, including railways, roads, urban infrastructure and power will be seen in the future.
Finance Minister showers Impetus on Urban Infrastructure Development Fund
The Government plan to form an Urban Infrastructure Development Fund via the use of priority sector lending shortfall. The National Housing Bank will manage the same. The public agencies will use this fund for the curation of urban infrastructure in tier 2 and Tier 3 cities. Finance minister said that the Government will make the provision of Rs. 10,000 crores per annum for this project.
The co-operative societies got an extended limit of Rs. 3 crores for tax deducted at source (TDS) on cash withdrawal.
Special Economic Zone
The finance minister proposed provision of a time limit for an SEZ unit to bring the proceeds from exports of goods or services in India. To claim deduction on export income, it will be compulsory to file income tax return in the future.
Finance Minister made Major Announcement for GIFT IFSC
- The below-listed measures will be taken for the advancement of business activities in GIFT IFSC:
- Allocation of powers under the SEZ Act to IFSCA to avoid dual regulation
- A single window IT system will be formed for registration and approval from IFSCA, SEZ Authorities, GSTN, RBI, SEBI, and IRDAI.
- Granting acquisition financing by IFSC Banking Units of Foreign Banks
- Formation of a subsidiary of EXIM Bank for trade re-financing
- Modification of IFSCA Act for statutory provisions for arbitration, ancillary services, and avoiding dual regulation under SEZ Act.
- Distinguishing offshore derivative instruments as valid contracts.
- Time extension of tax benefits to funds relocating to IFSC, GIFT City till March 31,2025
- Setting up of data embassies in GIFT IFSC is also on cards.
