BUDGET 2017 – Unoccupied property, land pooling get RELIEF!!!

These TWO provisions will being some tax relief for builders
The Union Budget presented in the Parliament on Wednesday has a few proposals that have both direct and indirect implications for the realty sector. Here are two.

At present, a home that is unoccupied after being accorded a completion certificate is subject to tax on its notional rental income. Since for a property developer a constructed building is stock-intrade, the Budget has proposed to apply this rule only after one year from the end of the year in which the completion certificate is received. This gives a developer some breathing time to liquidate inventories.

Section 23 of the Income Tax Act specifies how the annual value of a house is to be determined. Considering specific business issues in case of a real estate developer, the Budget proposes to amend this Section. It is proposed that if a house consisting of a building and land is held as stock-in-trade, and the property or any part of it is not let out during the entire or any part of the previous year, its annual value or a part of its annual value, for a period up to one year from the end of the financial year in which the certificate of completion of its construction was obtained from the competent authority, will be considered nil.

This amendment will take effect from the assessment year 2018-19.

EXEMPTION ON LAND POOLING

This proposal is State-specific, but can be used as a precedent in future. The new capital city of Andhra Pradesh is being constructed through an innovative land pooling mechanism without the use of the Land Acquisition Act.

In a land pooling scheme, compensation in the form of a reconstituted plot or land is provided to the land-owners.However, the existing provisions of the Act do not provide for an exemption from tax on transfer of land under the land pooling scheme as well as on transfer of land pooling ownership certificates (LPOCs), or on the reconstituted plot or land. The Budget has proposed to exempt those holding land as on June 2, 2014, the date on which Andhra Pradesh was reorganised, and whose land is being pooled to create the capital city under the government’s scheme.

As of now, this is a State-specific relief. But one can look forward to similar relief in other cases if the circumstances are similar.

Courtesy By : Times Of India

Bengaluru builders breathe easy as budget brings relief !!!!

Real Estate Sector Hails Proposals To Grant Industry Status To Affordable Housing Projects | Reservations Remain Over Donations
Property developers in Bengaluru have welcomed the budget proposals to grant industry status to affordable housing projects and ease norms related to capital gains tax. They said it would help boost the sector which has been long under pressure.Builders feel the lowering of tax for the salaried class, especially in the Rs 3-5 lakh per annum segment, will boost spending power and drive investment in real estate. The announcement of National Housing Bank refinancing individual loans of about Rs 20,000 crore in 201718 is likely to give a push to affordable housing.

“We were not looking at drastic measures to be taken, rather, simple, small steps, all working towards the goal of enhancing the real estate sector. I believe this has been done with this budget,“ Suresh Hari, secretary of industry body Credai Bengaluru, said.

Prestige chairman Irfan Razack said that granting infrastructure status to affordable housing will give developers operating in this segment access more funds from banks.

Increasing the area of an affordable housing unit from 30 & 60 square metre built-up area to 30 & 60 square metre carpet area will provide an extra 25% to 30% more space in this category. “It’s a big boost to the common man and affordability,“ Brigade’s chief executive of residential segment Om Ahuja said.

“Extending the time horizon for project completion from 3 years to 5 years to avail tax benefits will encour age more developers to look at this segment seriously,“ Ahuja added.

Puravankara MD Ashish Puravankara has said that payment of capital gains by the landlord on joint development (JD) agreements in the year of completion was a welcome move. “This will enable real estate companies to pursue development without further infusion of capital in the acquisition,“ he said.

Sobha managing director J C Sharma has said that the government has sent a clear message that it is keen to support the sector which has been in the doldrums.

“In return they want us to also focus on affordable housing which has been its priority,“ he said.

Shares of all the listed developers from Bengaluru, including Nitesh Estates, were up, with Prestige rising as much as 5.6%. Sobha and Puravankara shares rose about 2.6% each.

Courtesy By :Times of India

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