Changes That Will Affect Your Home Purchase !
A look at the important Budget 2017-18 announcements and their implications for seekers
The Budget 2017-18 is largely positive for the real estate sector. It focuses on stimulating growth and simplifying laws to enable easier administration. The key changes for the sector are as follows: The deduction of 100% of profits for certain projects in the affordable housing segment, Introduced in the previous budget has been ftuther rationalised keeping in mind the practicalities involved in execution of realty projects.
One such move is the extension in the time limit allowed for completion of projects to 5 years thereby allowing sufficient time for the developers to complete such projects, which are usually large scale. Furtheir, the move from built up area to carpet area for the determination of size restrictions will mean larger houses for the segment. The earlier restriction of smaller sizes of 30 metres for peripheral areas of metros cities is now retaxed and thus the incentive is likely to spill over to such locations, which could incentivize builders to plan more homes in the affordable segment around the city seams.
The period for characterization of an immovable property as long term has been reduced from 36 months to 24 months. Further. the gamut of specified assets under section 54EC for the purpose of exemption of capital gains has been enlarged.
This improved liquidity will unlock 'lands which were otherwise blocked in real estate assets only to qualify for the lower tax rate under long term capital gains. It also puts funds to use in fttrtherance of government identified objectives like infrastructure through these bonds. Further, it is proposed that the base year for computing long term capital gains should be moved from 1981 to 2001. This change should considerably reduce the capital gains liability for old assets. In the midst of interest rate subventions for home loans in the specified category and easier capital gains provisions like above, one amendment which
hurts the home buyer is that of limiting the set off of loss under house property. Essentially set off of interest paid on acquisition of house property against other incomes like salary. income from other sources etc has been restricted to two lakh in a year. The earlier law in this regard allowed the entire interest to be set off against other incomes under the aforesaid heads in case the house property was let out.
BUILDERS WILL BE INCENTIVIZED TO PLAN MORE HOMES IN THE AFFORDABLE SEGMENT AROUND THE CITY SEAMS.
The above, comes along with many other efforts that will boost the sector and further the Prime Ministers dream of Housing for all by 2022 the most celebrated one being industry status to Affordable Housing, Increase in the allocation to PMAY and the permitted re-financing of individual housing loans by National Housing Bank.
The target of building one crore houses by 2019 in rural India and the thrust to infrastructure in the form of new policy on metro rail and increase of budget allocation to highways will positively impact the sector and decongest prime areas and cities.
Ironing out the issue of tax de-ducted at source in case of com-pensation received on compulsory acquisition of land where the compensation is otherwise exempted from tax is another move, which reduces undue hardships for assesses. The proposal to amend Air-ports Authority of India Act to en-able effective monetisat ton of land assets will increase much needed supply of land for development. While the Honourable Finance Minister has Ironed out certain difficulties for tax payers, some of the much awaited changes like in-crease in deductions with respect to rents or revision in limits for interest deductions for self-occupied house properties have been left unchanged. Lastly the promise to consider fUrther liberalisation of the FDI policy shall provide the necessary impetus to the sector in terms of easier and quicker access to for-eign capital.
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