To consider 2020 as just another year that went by, would be a terrible mistake. Most of us felt the dread of 2020, especially the real estate industry. The after-effects of the pandemic still persists and the union budget that took place a few days ago had some meaningful impact on the real estate sector. This blog would highlight the points that would bring about a paradigm shift in the industry.
First thing’s first: Affordable Homes made more affordable
The Ministry of Housing and Urban Affairs has been granted INR 54,581 crore in the Budget of 2021. The current government sees “Housing For All” scheme as high priority as many labourers and daily wage workers were rendered homeless owing to the nightmare of the pandemic.
In order to boost sales in the real estate sector, and provide a decent incentive to home buyers and real estate developers, the Finance Minister proposed to increase safe harbour limit from 10% to 20% for the specified primary sale of residential units.
In Budget 2019, July, the government provided an additional deduction of interest, amounting to INR 1.5 lakh for a loan taken to buy an affordable house. Ms. Nirmala Sitharaman proposed to extend the eligibility of this deduction by one more year, to March 31, 2022. The additional deduction of INR 1.5 lakh shall therefore be available for loans taken up till March 31, 2022, for the purchase of an affordable house.
Further, to boost the supply of affordable houses, the Finance Minister proposed that affordable housing projects can avail a tax holiday for one more year – till March 31, 2022.
Also, to promote the supply of Affordable Rental Housing for migrant workers, Sitharaman proposed to allow tax exemption for notified Affordable Rental Housing Projects.
This gives a huge sigh of relief to the working-class heroes who deserve their rightful exemption and gives them a breathing space to own an affordable home they have been dreaming of all these years.
To further support the unorganised labour force migrant workers, in particular, Nirmala Sitharaman proposed to launch a portal that will gather relevant information on the gig, building, and construction workers among others. This will help frame health, housing, skill, insurance, credit, and food schemes for migrant workers.
Making the REIT move
The Budget 2021 was a real game-changer for the Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs). The Finance Minister enabled debt financing of InvITs and REITs by Foreign Portfolio Investors by making suitable amendments in the relevant legislations. This move will ease the access of finance to these trusts thus augmenting the funds for real estate and infrastructure sector.
When the government abolished the Dividend Distribution Tax (DDT) in the previous budget to incentivize investment, the dividend was made taxable for shareholders. In this year’s budget, the Finance Minister exempted payment of dividends to REITs/InvITs from TDS, so as to provide ease of compliance.
At Pyramid Lifestyle, we try to keep up with the market trends and updates so that we can keep our customers up-to-date with the latest happenings in the industry. We ensure that our customers get to experience the benefits of not just living in perfect homes, but the benefits that the government has proposed and imposed.