By Alok Agrawal
The NDA government had taken several policy initiatives to give a boost to the ailing real estate sector leading to some signs of revival.
Home buying is considered a pivotal change in life. Given that homebuyers may be placed at various stages of the real estate cycle, let us take a look at homebuyers』 expectations from Budget 2018:
date = new Date(); date.setTime(date.getTime()+(1*24*60*60*1000)); $.cookie("dfp_cookie_article", "Y1", {expires: date,path:"/",domain: ".moneycontrol.com"});A. Booking stage:Under the erstwhile indirect tax regime, apart from Central Excise duty, VAT and entry tax was payable on construction material in most states. All of these taxes were not creditable for payment of Service Tax or VAT on construction of flats, etc. under the composition scheme. As a result, incidence of all these taxes initially paid by the builders were passed on to customers as part of the cost of the flat.
date = new Date(); date.setTime(date.getTime()+(1*24*60*60*1000)); $.cookie("dfp_cookie_article", "Y1", {expires: date,path:"/",domain: ".moneycontrol.com"});With the real estate being partially brought under the GST regime, credit of taxes paid on purchase of materials and transportation costs is now available to builders and it is therefore expected that the incidence of tax cost on the overall price of flats should reduce. By introducing the anti-profiteering measure under GST regime, it is intended that builders should revisit their cost sheets, as they are statutorily obliged to pass on the benefit of reduced tax cost to flat buyers by way of reduced prices/ instalments. However, it is expected that Budget 2018 should bring more clarity on computation aspects of such anti-profiteering measures to give comfort to house buyers.
If this is done, it would support the government’s mission of 'Housing for All by 2022' in a big way by making housing more affordable.An additional deduction of INR 50,000 from taxable income was available for first time homebuyers where value of the property was limited to INR 50 lacs, loan taken was limited to INR 35 lacs and whose housing loans were sanctioned during the period 1 April 2016 to 31 March 2017. It would be beneficial if this deduction is reinstated for first time home buyers with loans sanctioned after 31 March 2017 also.
Further, homebuyers residing in metro cities would hope for a higher value cap (similar to certain other tax exemptions such as HRA exemption).Currently, pre-construction period interest is allowed as a deduction in 5 equal annual instalments starting from the year in which the construction of house property is completed. Since there is no separate limit to allow this pre-construction period interest (i.e. this is covered within the overall limits for interest on self-occupied and rented properties), homebuyers typically are unable to take any tax benefit for such interest cost. Therefore, it would help many homebuyers if such interest is allowed as deduction in the year of payment of interest, even if such deduction is subject to conditions on time limits for construction completion and continued ownership of the property.
B. Post-possession:In the last Budget, set-off of house property loss against other taxable income was restricted to INR 2 lacs. Any excess loss is to be carried forward and adjusted against only house property income of future for 8 years. Continuing with the same intent of bringing parity of taxation with self-occupied house property owners, this limit of allowing loss to be off-set against any taxable income of that year should be increased to at least INR 3 lacs.
C. Stage of sale: Lock-in period for capital gains exemption should be reduced from 3 to 2 years
The last Budget reduced minimum holding period for immovable properties for beneficial tax treatment from 36 months to 24 months. No tax is imposed on long term capital gains in some situations (subject to conditions), where the taxpayer buys a new property and holds it for 36 months. It is expected that this minimum period of holding for such new property is also reduced from 36 months to 24 months.
Such amendments will not only bring a cheer amongst existing homeowners, but would provide positive stimulus to the demand from millions of Indians who are keen to climb up the property ladder.
(With inputs from Manish Shah, Bhavik Shah, and Vikas Birla)
The author is Senior Director, Manish Shah is Director, Bhavik Shah is Senior Manager and Vikas Birla is Manager with Deloitte Haskins and Sells LLP.本文來源:http://www.moneycontrol.com/news/business/real-estate/budget-2018-homebuyers-expectations-for-real-estate-2493245.html
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