It was a day of eager anticipation as investors, homeowners, and real estate firms patiently awaited the Union Budget for the financial year of 2019. From income tax benefits to revisions in Goods and Services Tax (GST) for the housing sector, there were a lot of expectations for the new year. Interim Finance Minister, Piyush Goyal, presented the budget in the Lok Sabha on the 1st of February 2019, and we are here to bring you the highlights of the Union Interim Budget 2019-20 for the real estate industry.
- Out of the annual rent you pay for your home, no TDS will be deducted on Rs. 2,40,000 of the total amount, every year.
- A person having 2 residential houses shall not be required to pay tax on notional rent on any one of the said residential houses.
- For real estate firms, the tax on notional rent on unsold inventory need not be paid for 2 years
- The time limit for getting approval from the competent authority is extended from 31st March, 2019 to 31st March, 2020 for claiming deduction 80-IBA for the Developers.
- Tax exemption – Section 54
If you were receiving capital gains up to 2 crores on one house, you can now receive tax benefits of rollover of capital tax gains from investment in two houses – this option can be exercised once in a lifetime.
- If you earn taxable annual income up to Rs 5 lakhs, you are eligible for a full tax rebate on your income.
- You can also claim income tax deductions of up to Rs 2 lakh on home loan interests, 150,000/- for housing loan principle repayment, , Rs. 50,000/- for National Pension Scheme (NPS) contributions, Rs. 75000/- for medical insurance & medical expenditure.
- If you earn an annual income of Rs 6.5 lakh you can save income taxes, if you invest up to Rs 1.5 lakhs savings schemes under Section 80C of the Income Tax Act. Some of these include Public Provident Fund (PPF), Equity-Linked Savings Scheme (ELSS), National Saving Certificates (NSC), Principle repayment of Housing loan, etc.
- The standard deduction has also been increased from the present Rs 40,000. As a salaried employee, you can now claim a standard deduction of Rs 50,000 on your taxable income in place of medical reimbursements and transport allowance.
With the proposed laws, revisions in tax, and innovations in infrastructure by the government in the Interim Budget 2019-2020, we hope the upcoming year will be a fruitful period of investments for all our loyal customers in the real estate sector.
The views expressed in the Budget Highlights are based on our understanding of the proposed amendments read with relevant present provisions of the Income Tax Act, 1961. Though due care has been exercised in preparing the Budget Highlights, professional advise should be sought before placing reliance on highlights.