Highlights of Union Budget 2020 in Real Estate sector
The Union budget 2020 is out with a promising future for residential investors as Nirmala Sitharaman, the current Finance Minister of India has announced fundamentals of the Indian economy getting stronger. Banks have cleared up and recapitalized the accumulated loans of the past decade, assuring the stability of the micro-economic growth of the country.
In the budget speech of the financial year, 2020 by the Finance Minister, foundation was in principal focus. Some key points of the statement were 100 new airports under the UDAN scheme 2024, which will improve city image as a business destination and also encourage rental houses. Other significant announcements include the use of railways owned land to set up large solar plants, 148km long suburban transit project at the cost of 18600 crores, and provision of 20% equity with external assistance of up to 60% for project cost by the Central Government.
In total, the government has proposed 1.70 lakh crore for transport infrastructure in the financial year 2020-2021. Included in the National Infrastructure pipeline launched in December 31, 2019, the budget will cover 6500 projects across sectors, each classified under housing, safe drinking water, access to clean and affordable energy, healthcare, educational institute, modern metro and railway station, airports, bus terminals, transportation, logistics and warehousing, irrigation projects and more. The National Infrastructure Pipeline project focusses on improving the ease of living of each citizen of India.
The government has granted tax holiday on the profits earned by developers on affordable projects approved by 31st march 2020 in line with the government's initiative "Housing for all." Sitharaman has proposed to extend the date of loan sanction for availing this benefit for one more year to ensure more people avail of the additional deduction. The government also plans to continue the further reduction of INR 1.5 lakhs for interest paid on home loans taken for the purchase of affordable housing by one year to boost the supply of affordable houses in the country. The interest deduction of up to INR 3.5 lakh for affordable housing priced below INR 45 lakh as against INR 2 lakh earlier for loans availed until March 31, 2021.
Personal income tax and changes in slab:
For taxpayers who refrain from the specific tax deduction and exemption, the new budget has simplified a particular tax regime for them. You can now make the switch to new rates if you're willing to let go of the deductions, which significantly reduces tax. This change is introduced to minimize the hardship in real estate transactions and provide relief to middle-class taxpayers.
See below table to know the new income tax rates:
Taxable income slab
Rs 0-5 lakh
Rs 5-7.5 lakh
Rs 7.5-10 lakh
Rs 10-12.5 lakh
Rs 12.5-15 lakh
Rs 15 lakh and above
Making Indian real estate 'Green.'
The Indian green building market has seen massive growth in the real estate segment and is suspected of growing to 10 billion sq ft by the year 2022. It is driven by factors like increasing awareness level, environmental benefits, and government support.
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