Buying A Home

Budget 2018: How does it bode for the Real Estate sector?

Budget 2018 bought in encouragement to the real sector which has been adversely affected due to demonetization and regulatory reforms. There were a few things in Union Budget 2018 that is certain to stimulate demand for real estate. While a change in standard tax deduction of ₹40,000 in lieu of transport and medical expenses was the only gift to the salaried class, there were two major announcements that have been at the top of real estate news. Let’s take a look at them.

No penalty for property valued at 5% below the circle rates
The Finance Minister dedicated a paragraph to “circle rates”. Circle rates are the minimum rates at which property has to be registered when it is transferred. The circle rates are fixed by the state government with an objective to penalize the buyers when assets are disclosed at an under-valued rate.

As of now, while computing capital gains, business profits and other sources in respect to transactions involving immovable property, the consideration value or circle rate value, whichever is higher, is adopted, and the difference between the two is counted as income in the hands of both purchaser and seller.

But with the implementation of Budget 2018, there shall be no such adjustments if the circle value does not exceed 5% of the consideration. This will provide a much needed relief to both buyers and sellers.

Dedicated fund for affordable housing
The government has been continuously pushing affordable housing-for-all scheme in the form of Pradhan Mantri Awas Yojana (PMAY). The government has been consistent in addressing affordable housing by giving it infrastructure status to the segment in the previous budget, to helping increase the beneficiaries in CLSS, and expanding the carpet area and re-defining the beneficiaries in CLSS under PMAY. It was further boosted by the creation of a dedicated fund under the National Housing Bank (NHB).

Both these announcements have dominated the top news of real estate, and are expected to help the real estate sector pick up again in the years to come.

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