New Delhi, Feb 1 (IANS) A slew of measures to boost the real estate sector were proposed by the Centre on Friday which includes extending the exemption period for levy of tax on notional rent on unsold inventories to two years.
Owners of unsold inventory are currently exempt from paying income tax on notional rent for a period of one year.
Presenting the Interim Budget 2019-20, Finance Minister Piyush Goyal said: “For giving impetus to the real estate sector, I have proposed to extend the period of exemption from levy of tax on notional rent, on unsold inventories, from one year to two years, from the end of the year in which the project is completed.”
The minister also proposed to exempt the levy of income tax on notional rent on a second self-occupied house. Currently, income tax on notional rent is payable if a person has more than one self-occupied house.
“Considering the difficulty of the middle class having to maintain families at two locations on account of their job, children’s education, care of parents, and so on, I am proposing to exempt levy of income tax on notional rent on a second self-occupied house,” Goyal said.
In a major push for the affordable housing segment, the Finance Minister also proposed to extend the benefits under Section 80-IBA of the Income Tax Act for one more year till March 2020.
Also, the benefit of rollover of capital gains under section 54 of the Income Tax Act will be increased from investment in one residential house to two residential houses for a taxpayer having capital gains up to Rs 2 crore.
“This benefit can be availed once in a life time,” Goyal said.
In a major tax reform proposed in the last Budget of the current government, the Finance Minster proposed tax exemption for individual annual incomes of Rs 5 lakh, from the current level of Rs 2.5 lakh.
“Individual taxpayers having taxable annual income up to Rs 5 lakh will get full tax rebate and therefore will not be required to pay any income tax. As a result, even persons having gross income up to Rs 6.50 lakh may not be required to pay any income tax if they make investments in provident funds, specified savings, insurance, among others,” he said.
This measure would lead to a higher disposable income with individuals and in a way lead to higher demand in various segments, with the real estate sector also being a beneficiary.