Budget 2019 expectations: From income tax exemption to House Rent Allowance, what real estate sector wants from PM Modi

Jan 30, 2019, 14:12 PM IST
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Budget 2019: On account of IL&FS crisis hitting the Indian realty to a larger extent as the money flow almost dried up for both developers and the home buyers, the wish list of the Indian realty has grown longer. From smooth credit line to industry status, here are the list of wishes that the realty insiders have put forward before the Narendra Modi government. The Finance Minister of India will stand in Parliament on February 1 to present the Budget 2019. Since Budget usually determines how most industries are likely to perform through the year, the real estate sector presents its expectations:   

1/8

Challenges in real estate

Challenges in real estate

Considering the current set of challenges in real estate, while efforts have been made to streamline most processes, the 2019 budget could do a lot more. Changes such as creating a Single Window Clearance system, bringing Real Estate under GST, and tightening RERA rules to strengthen investor sentiment would be very welcome. These coupled with raising the personal income tax exemption limit for interest on home loans and rental income would be much to the advantage of home-buyers and the sector as a whole. (Pixabay)

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2/8

Single tax structure in GST

Single tax structure in GST

Although GST has been introduced in real estate, it still requires further rationalization as additional levies like stamp duty and registration are still separately charged. They should be included within a single tax structure. Lowering the GST slab on under-construction properties to 5 or 6 percent from the existing 12 percent would usher in a lot of positive movement in the sector. (PTI)

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Income tax rebate

Income tax rebate

With GST, stamp duty, income tax, and capital gains tax, investing in real estate is not considered as a judicious option anymore. Therefore, an income tax rebate could be provided for home buyers. (Pixabay)

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Rebate under Section 80C

Rebate under Section 80C

For the government to achieve its objective of ‘Housing for all by 2022’ under 80C, the limit for principal repayment should be increased from the current Rs 1.5 lakh, especially for affordable housing or such principal repayments should be a separate limit outside Sec 80C. (Pixabay)

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5/8

Tax on unsold properties

Tax on unsold properties

The industry will also benefit if the tax on unsold properties which is introduced recently, is done away with because given the current sales cycle, inventories are lying inactive with the developer thereby adding more pressure to sell. (Reuters)

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6/8

Liquidity for developers

Liquidity for developers

The government should figure ways to increase liquidity for developers to overcome the NBFC crisis. (Reuters)

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7/8

House Rent Allowance

House Rent Allowance

Salaried class get House Rent Allowance (HRA) and can claim tax deduction. However self-employed people and those who draw lump sum amount can only claim up to Rs. 5000 a month under section 80GG. 2019 budget should remove this irregularity. (Reuters)

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8/8

Tax deduction on home loan interest

Tax deduction on home loan interest

Allow tax deduction on home loan interest in the under-construction phase of the apartment. Currently, it can only be claimed at the completion of construction in five equal installments and that also is subject to Rs. 2 lakh limit. Allowing deduction in the under-construction phase will be make houses more affordable for people especially in the current scenario when liquidity pressures on developers have elongated the construction period. (Reuters)

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