1. Exemption of Tax on Notional Rent
Addressing the common scenario, where people move from their home city for jobs, the FM announced a sigh of relief by exempting tax on notional rent on the second home which is self-occupied. “Currently, income tax on notional rent is payable if one has more than one self-occupied house. Considering the difficulty of the middle class having to maintain families at two
locations on account of their job, children's education, care of parents etc. I am proposing to exempt levy of income tax on notional rent on a second self-occupied house,” stated Piyush Goyal.
The FM also announced a breather for the real estate sector, as per which, the period of exemption for levy of tax on notional rent on unsold inventories, has been extended to two years from completion of the project.
2. Extension of Section 80-IBA
The FM proposed a 1-year extension of section 80-IBA, as per which, a builder is not required to pay Income Tax for affordable housing projects approved on or after 1 st June 2016. The extension has been given till 31 st March 2020. The move is sure to boost affordable housing projects.
“For making more homes available under affordable housing, the benefits under Section 80-IBA of the Income Tax Act is being extended for one more year, i.e. to the housing projects approved till 31st March 2020,” the FM had clarified in his Budget 2019 speech.
3. Expansion of TDS Slab for Tax on Rent
During Interim Budget 2019, the FM announced the extension of TDS slab for deduction of tax on rent from 1.8 lac to 2.4 lac per year. The FM “Further, the TDS threshold for deduction of tax on rent is proposed to be increased from Rs 1,80,000 to Rs 2,40,000 for providing relief to small taxpayers.”
4. LTCG Exemption up to Rs. 2 Crore
Long-Term Capital Gain Tax (LTCG) exemption up to Rs 2 crore on the sale of one existing property to buy two residential properties can be availed now. However, the FM capped it to once in a lifetime exemption to keep a check on any manipulations.
“The benefit of rollover of capital gains under section 54 of the Income Tax Act will be increased from investment in one residential house to two residential houses for a taxpayer having capital gains up to Rs 2 crore. This benefit can be availed once in a lifetime,” declared Mr Goyal.
5. Review on GST
The acting Finance Minister also hinted more GST changes in the real estate sector when he said, ‘Our Government wants the GST burden on home buyers to be reduced and accordingly we have moved the GST Council to appoint a Group of Ministers to examine and make recommendations in this regard at the earliest.’ These words set the stage for GST on under-construction projects, which is a big concern for home buyers and developers alike.