Union Budget 2016: Good news for first time home buyers!

New Delhi, Mar 1: Finance Minister Arun Jaitley announced series of measures for common man in Union Budget which was tabled in Parliament on Monday. In Budget, Finance Minister proposed an additional Rs 50,000 deduction on interest on loans for first time home buyers

Aiming to boost demand in realty sector, Minister also announced tax incentives on development of affordable housing, besides exempting REITs from dividend distribution tax.

Home buyers will also be exempted from service tax construction of affordable houses up to 60 sq metres under any scheme of the central or state government including PPP schemes.

Apparently, the move has been taken amid huge slowdown in real estate sector, particularly housing segment, resulting in a huge delay in delivery of projects to customers and piling up of unsold inventories.

Listing promotion of affordable housing as as one of the thrust area, Finance Minister Arun Jaitley in his budget speech said: "For the first?home buyers I propose to give deduction for additional interest of Rs 50,000 per annum for loans up to Rs 35 lakh sanctioned during the next financial year, provided the value of the house does not exceed Rs 50 lakh".

At present, Rs 2,00,000 deduction is allowed for interest paid on home loans. In a relief to individual tax payers, Jaitley also increased the tax deduction limit to Rs 60,000 per annum from the current Rs 24,000 on housing rent.

To boost supply of affordable homes, he proposed 100 per cent deduction for profits to an undertaking from a housing project for flats up to 30 sq metres in four metros and 60 sq metres in other cities.

The deduction would be applicable on the projects approved during June 2016 to March 2019, and completed within three years of the approval. Minimum Alternate Tax (MAT) will, however, apply to these undertakings.

"Pradhan Mantri Awas Yojna embodies the assurance of the Government to address the housing needs of all and more specifically the poor, in a time bound manner. Construction of houses creates considerable employment opportunities as well," he observed.

"Another proposal to stimulate housing activity is to facilitate investments in Real Estate Investment Trusts (REITs). I propose that any distribution made out of income of SPV to the REITs and INVITs having specified shareholding will not be subjected to Dividend Distribution Tax," Jaitley said.

In September 2014, market regulator SEBI had notified norms for listing of REITs that would help attract more funds in a transparent manner into the real estate sector.
REITs, which can be listed on stock exchanges, would help channelise both domestic and overseas investments into commercial real estate projects.

Jaitley further exempted service tax on construction of affordable houses up to 60 sq metres under any scheme of the central or state Government including PPP Schemes.

He extended excise duty exemption, presently available to concrete mix manufactured at site for use in construction work at such site to ready mix concrete.

OneIndia News

(With inputs from PTI)