Income Tax Relief For Developers, Home-Buyers To Boost Real Estate Demand

Bank guarantees for construction activity will be reduced to 3 per cent of overall project value.

Finance Minister Nirmala Sitharaman has announced income tax relief for developers and home-buyers in order to boost the demand for residential real estate, as part of Atmanirbhar 3.0 stimulus measures to push economic growth. Tax relief will be provided for developers and home buyers for houses up to Rs 2 crore, under the aegis of the scheme. “This will incentivize people to buy homes and bring down the excess inventory,” Nirmala Sitharaman said. The income tax relief is only meant for first-time buyers and will be available till June 30, 2021.

The differential between circle rate and agreement value for primary sale of residential units of up to Rs 2 crore will be doubled, the finance minister said. This will be applicable on primary sale of residential units of value up to Rs 2 crore. This will help the middle class which wants to buy when the housing sector is sitting on inventories, the finance minister said, adding that necessary amendment to the income tax act will be made in due course.

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Bank guarantees for construction activity, which constituted 10-15 per cent of the total project cost, will now be reduced to merely 3 per cent of the overall project value. This will ensure availability of additional liquidity to companies and burden on contractors will also come down as a result.

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