As part of Atmanirbhar 3.0 stimulus measures to revive the economy, Union Finance Minister Nirmala Sitharaman has announced major income tax relief for developers and home-buyers in order to boost the demand for residential real estate across the country. This is likely to give a significant boost to residential real demand amid the ongoing festivities. As part of the announcement, the first-time buyers of houses priced up to Rs 2 crore will get income tax relief of up to 20 per cent and this will be available till June 30, 2021. FM Sitharaman emphasized that the tax relief will assist the middle-class families who are willing to buy when the housing sector is sitting on inventories.
” The increase in the differential between circle rates and agreement value – from 10 per cent to 20 per cent (under Section 43CA) – is indeed a good move. This limited-period offer (up to 30 June 2021) will benefit both developers and homebuyers. For homebuyers, it is a clear added financial benefit to round off the existing offers and discounts. Additionally, the consequential relief up to 20 per cent to buyers of these units under Section 56 (2) (x) of the IT Act for the said period will definitely boost demand, especially in the affordable and mid segments, ” said Anuj Puri , Chairman, ANAROCK Property Consultants.
He added that for developers, this move will help clear unsold stock. As per ANAROCK Research, there are approx. 5.45 lakh unsold units across the top seven cities priced up to Rs1.5 crore while another 49,290 units priced between Rs 1.5 crore to Rs 2.5 crore.
” The government allowing a difference of 20 per cent between the circle rate and the agreement value is a step in the right direction. Like stamp duty, this move too is time-bound and calls for action immediately. The move is a win-win for both developers and homebuyers. It will help reduce the high inventory, reduce the cost of acquisition for homebuyers. Real estate prices in many pockets of India have remained subdued, declined in some cases, a higher difference will help address this issue, ” said Krish Raveshia, CEO, Azlo Realty.
Industry experts believe that the additional outlay of Rs 18,000 crore for PM Awas Yojana (PMAY – Urban) is another welcome step towards fulfilling its vision of housing for all by 2022. It will help 12 lakh houses to be grounded and 18 lakh houses to be completed. This will help in bridging the housing gap to a good extent and is simultaneously an excellent economic growth driver by creating more employment.
Five years after the implementation of the scheme, the Pradhan Mantri Awas Yojana (Urban) has made steady progress across states. As of August 2020, a total of 1.06 crore homes had been sanctioned in the country, of which 33 per cent or approx. 35.18 lakh homes are completed while another 66.23 lakh units have been grounded for construction.
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