Real estate industry as any other industry has had high expectations from the union interim budget
of 2019. The industry slowly yet successfully adapting itself to the series of economic reforms such
as Demonetisation, GST, RERA Act 2016, expected measures that would lower the overall cost of
construction, and help boost demand for finished products.
Government recognises the industry as the driver of economic growth by propelling other industries
including cement, steel, etc., and as the second largest employment generator offered many tax and
other incentives to help spike demand for residential property, especially.
Some of the key points in the budget that are relevant to the real estate industry include:
1) Tax benefits under section 80 (1) (B) (A) have been extended for a year more, i.e. until
March of 2020.
2) Levy of tax on notional rent on the completed projects, unsold inventory, has been extended
to two years, earlier it was only for one year from the day the project is completed.
3) Under the current provisions, if you have a second self-occupied house, you are liable to pay
tax on notional rent of that second self-occupied house. However, considering the
requirements of many middle class families having to maintain two houses, (one at work
place and other for families living in cities for children’s education, looking after old age
parents, etc.) Exemption of tax on notional rent for a second self-occupied house has been
4) The threshold for deducting TDS on tax on rent is now proposed at 2, 40,000 instead of the
earlier limit of 1, 80,000.
5) Capital gains roll over benefit under section 54 has been increased to investments in two
residential properties, earlier the benefit was awarded for one residential property only. This
capital gains benefit can be availed only once in lifetime.
6) Those with a taxable income of 5, 00,000 will get tax rebate and need not pay income tax.
Well, the budget has been welcomed by the real estate industry as if offers tax benefits to help
home owners and property developers. The exemption of tax on notional rent extended to two
years, will help property owners with enough time to sell their inventory.
Tax benefits under section 80 (1) (B) (A) will help homeowners with affordable housing aimed at the
government’s policy of “Housing for all by 2022.” Industry feels that these measures will help take
up more affordable housing projects, there are already about 100 such projects coming up.
Industry experts feel that the steps to improve infrastructure such as “electricity for all by the year
2019,” will have a positive impact on the real estate market as more and more areas become viable
for residential property development.
While these tax incentives and benefits help boost demand for completed projects, industry experts
are still waiting for rationalising of GST slabs for projects that are under construction. Industry is still
left guessing about the slabs and implementation at the earliest. Similarly, impact of GST on
Homeowners is another unanswered topic in this budget.