In a major boost to the residential real estate sector, the government has provided tax relief to both homebuyers and realty developers by increasing the differential between ready reckoner or circle rates and market value for tax exemption, writes The Economic Times.
The government has decided to increase the differential from 10% to 20% under Section 43CA of Income Tax Act. This will be applicable on primary sale of residential properties valued up to Rs 2 crore until June 30, 2021.
Realty developers’ bodies including Credai and National Real Estate Development Council (Naredco) have been suggesting this step for some time as the property values in many localities across the country dipped below ready reckoner rates that are used to calculate the stamp duty and other taxes to be paid to the government authorities.
Until now, any deal with value lower than the existing ready reckoner, or circle rate of 10% or more, would result in additional tax burden for both the parties.
“The move is expected to help realty developers to clear their unsold stock. There are around 545,000 unsold units across the top seven cities priced up to Rs 1.5 crore, while an additional 49,290 units are priced between Rs 1.5 crore to Rs 2.5 crore,” said Anuj Puri, chairman, Anarock Property Consultants.
The government has also announced an additional outlay of Rs 18,000 crore for Prime Minister Awas Yojana (PMAY-Urban) to support its objective of Housing for All by 2022. The additional outlay is over and above Rs 8,000 crore already spent this year and is expected to help 1.2 million houses to be grounded and 1.8 million houses to be completed. This will help to minimise the housing gap in the country and act as an economic growth driver by generating more employment.
The finance minister has also extended the Emergency Credit Line Guarantee Scheme (ECLGS) till March 2021 from earlier sunset time of November end for the benefit of 26 stressed sectors including real estate as identified by KV Kamath Committee.
The government-sponsored Special Window for Completion of Construction of Affordable and Mid-Income Housing Projects (SWAMIH I) has so far approved 135 projects with an outlay of Rs 13,200 crore, said finance minister Nirmala Sitharaman while announcing the relief measures on Thursday.
This investment through the SBICAP Ventures-managed last-mile fund for stressed real estate projects will result in completion of 87,000 stuck houses across the country.