Post demonetization, people throughout the country, including the salaried employees and the business owners, were looking forward to the 2017 Union budget. This budget has been presented in the month of February for the first time ever. Also, the railway budget, which is always presented separately, was also unveiled on the same day – the 1st of February. The Union Budget has brought a lot of respite to businesses and also to individuals. It has also majorly affected the real estate sector and many other industries.
Here are 3 major provisions in the 2017 budget allocated to the real estate sector.
1. Building Homes for the Under Privileged:
The Government of India in the 2017 budget has allocated Rs. 23,000 crore towards providing shelter to the homeless. This project, which is called the Pradhan Mantri Awaas Yojna, aims at building ten million homes and will be completed by 2019. The government has also encouraged many construction companies to be a part of this initiative by increasing the tax exemption time limit. When a builder constructs on a piece of land that was previously a slum, the company has to provide accommodation to the slum dwellers in their buildings. When doing so, the government gives the construction company an exemption in tax provided the project is completed in three years. This project completion time line has now been increased to five years.
2. Tax Relief on Unsold Property:
Earlier, a construction company was expected to pay the taxes on the entire cost of the project, including the price of the land and the estimated prices of the completed apartments, at the very beginning. The 2017 budget provides relief from this rule as the properties would now be taxable only after a year from the completion of the entire project. This has been done to give the builders some time to sell apartments and gather the required money to pay taxes. It will certainly ease the financial burden of the construction companies and will encourage more builders to start construction.
3. Respite on the Time Period for the Capital Gain Tax to be Applicable:
When owners sell any immovable property as a short-term asset, they have to pay more tax on the profit, than if they sell it when it is a long-term asset. Initially, a short-term asset would become a long-term asset after owning it for three years, but post the 2017 budget, this time period has been reduced to two years. This reduction will certainly persuade more people towards investing in immovable properties.
The 2017 Union Budget has been favorable to the real estate industry. The respites given on time limits and taxes will definitely encourage more construction companies to start building homes and so will make real estate more affordable for all. People can now look at real estate from a short-term investment point of view as well. You can fulfill your dream of owning a home by purchasing affordable flats in Delhi, budget row houses in Pune, or luxury apartments in Chennai OMR.
Follow us on Facebook, Twitter and Instagram for more updates. Don’t forget to like and share. Do tell us your views in the comment box below.