The industry was expecting slew of measures from the Union Budget 2018 such as reduction of Goods and Services Tax from the present 12% to boost sales, increase in tax rebate for home loans, etc..
Budget 2018 did not provide a larger bag of sops for home buyers and developers. Instead, nominal relief was provided to the real estate sector by not levying Capital Gains Tax on property transactions where the difference between sale price and Stamp Duty (Circle Rate) value is not over 5%.
While presenting Budget 2018-19, Union Minister for Finance and Corporate Affairs Arun Jaitley said, "Currently, while taxing income from capital gains, business profits and other sources in respect of transactions in immovable property, the consideration or Circle Rate Value (also known as the Ready Reckoner Rate), whichever is higher, is adopted and the difference is counted as income both in the hands of the purchaser and seller. Sometimes, a difference can occur in different properties in the same area because of a variety of factors including the shape of the plot and location."
Thus, it has been proposed that no adjustment be made in a case where the Circle Rate value does not exceed 5% of the consideration. Rajeev Talwar, MD of DLF, puts it simply: "Benefit of not levying Capital Gains tax is limited to land transactions and not on the sale of apartments as circle rates are only for plots."
"It is a very significant positive amendment," Sanjay Sanghvi, Partner, Khaitan & Co. said, "This is a great relief for people transacting in properties and will avoid litigation with tax authorities."
The industry was expecting slew of measures from the Union Budget 2018 such as reduction of Goods and Services Tax from the present 12% to boost sales, increase in tax rebate for home loans, etc., but none of those found a mention in Jaitley's speech.
"The real estate industry was seeking some very important amendments like the industry status, streamlining of taxation norms for Real Estate Investment Trusts and rationalisation of GST which we hope will be addressed soon," Kishore Bhatija, MD, Real Estate Development of K Raheja Corp said.
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