WILL REAL ESTATE SECTOR GETS REJUVENATED BY THE BUDGET MEASURES?

BUDGET 2020 CAPSULE – 3

WILL REAL ESTATE SECTOR GETS REJUVENATED BY THE BUDGET MEASURES?

REAL ESTATE – The Real wealth creator for any economy. There is a famous saying, ““Real estate cannot be lost or stolen, nor can it be carried away, you can only get benefited. While an individual’s wealth is the reflection of the amount of investment made in Land, building etc. a country’s wealth treasure is the amount of investment made in its infrastructural facilities. The Government has rightly identified need for investment in infrastructural facilities and brought in a mammoth of measures and incentives to kickstart growth in the said sector.

SO, WHAT ARE THEY?

1)   INVESTMENT IN INFRASTRUCTUAL FACILITIES IN COUNTRY OF ABOUT 100 LAKHS CRORES OVER A PERIOD OF NEXT 5 YEARS. - 

The Government has already launched this ambitious project. In fact, the honourable Finance Minister has already unveiled the project on 31^st December, 2019.

So, how much is Rs. 100 Lakhs Crores? India’s Total budgeted expenditure in Budget 2020 stood to Rs. 30 Lakhs crores. So, almost 3 years budgeted expenditure should flow to this project only. Does it make sense? It’s impossible for the government to invest so much of the capital out of its own funds. So, comes the External Commercial Borrowing. Government will infuse the capital to this project through External Borrowing.

2)   Tax holiday for Companies engaged in creating infrastructural facilities under “affordable housing scheme”. So, such companies need not to pay any income taxes. Whatever the profit earned by them is completely tax free in the hands of Companies. This scheme has the capacity to bring foreign investments to India. It plays a key role for rejuvenating the sector.

3)   Extension of time limit u/s 80EEA: The Deduction of Interest paid on Housing loan borrowed was earlier limited to loans borrowed on or before 31/03/2020 and now the same has been extended to one more year i.e. till 31/03/2021 which will again bring many of the assessees into this category and helps in balancing the demand and supply chain effectively.

4)   Increasing the limit u/s 43CA/50C on sale of Land and or building

Taxability of proceeds from sale of land and building in India is with reference to the Stamp Duty value of the said Property. Earlier analogy was to tax the amount received on sale of property or the Stamp duty value for the said property, whichever is higher. But this analogy had been changed in recent past including the recent budget. The changed analogy has considerably brought down the tax of the assessee as explained below.

Particulars	Case I	Case II	Case III	Case IV
Stamp duty Value	47	52	53	54
Actual Sale consideration	50	50	50	50
Taxable amount:
Taxable amount on or before 31-03-2018	50	52	53	54
Taxable amount on or before 01-04-2018	50	50	53	54
Taxable amount on or before 01-04-2020	50	50	50	50
Savings in the hands of an assessee as compared to the analogy existed on 31/03/2018.	0	2	3	4

       “He who owns more will always be respected more.” So, plenty of measures have been taken by the government in this respect and we are marching towards 5 Trillian Economy.

✍

Sanjay R Shetty

Chartered Accountant