Budget 2019 – What It Really Means For Property Buyers & Developers
The interim fiscal budget 2019 saw a mixed bag of reactions from financial experts of the country. Aimed primarily at the middle class, the budget sought to reduce the tax burden on the citizens by introducing various sweeping new policies.
2019 budget also offered some relief to real estate developers by extending some of the existing tax benefits for the real estate development business.
For Homebuyers –
The proposal for providing tax rebates for those earning less than 5 Lacs seeks to boost the purchasing power of the middle class creating investment avenues for this class of citizens into real estate. There was some relief for the people who own or are looking to buy their second property as tax on notional rent for their second self occupied property has been been been completely exempted.
This was a major pain for migrant workers who may buy property in the city of their work and also pay tax for their house in their home town as previously one could only have one self occupied house. All other residential properties were considered deemed to be let out. The notional rent exemption ceiling has also been increased from 1.8 Lacs to 2.4 Lacs.
The tax bracket for income from capital gains has also been doubled from 1 Crore to 2 Crore further seeking to boost demand in the property market.
For Real Estate Developers –
As for real estate developers, the budget 2019 proposed that tax liability on unsold inventory as notional rent will only levied from the second year after completion as opposed to the first year moreover 100% tax exemption on profits from affordable housing was also granted till march 2020 under Section 80-IBA.
The Conclusion –
In conclusion the budget 2019 has promoted more liquidity and purchasing power in the hands of the middle class but what it did not provide was a solution for more than 3 lac property buyers stuck with properties in unfinished projects for over a decade now. No asset funds or reserves were created in respect to the completion of stalled or unfinished projects.
No announcement was made for the NBFC participating in the real estate sectors either, putting the financial crunch for real estate developers unchanged. As for the demands for a unified body for clearing real estate projects, the budget took no notice of the same.
Although this budget 2019 ha come as favorable wind in the slooped sails of the real estate sector in India, several core issues plaguing the sector like incomplete penetration of RERA, lack of market demand and shortage of funds at the hands of the developer will still be prevalent.
What are your thoughts on this budget 2019? A new breath of life for a slowing industry or just promises at the surface? Comment down below!