The gain of Real Estate in Union budget 2021 presented by Finance Minister Nirmala Sitaraman on 1st of Feb 2021

Post the Covid-19 pandemic  Real estate sector had high expectation from the union budget 2021. While presenting the budget finance minster says priority of the Government are “housing for all” and affordable housing.

Government granted 54581 crore to the Ministry of housing and Urban Affairs.

The gains of Real Estate from Budget 2021 :

Increase of Safe Harbour Limit on sale of residential units

In order to incentivise home buyers and real estate developers, it is proposed to increase safe harbour limit from 10% to 20% for the specified primary sale of residential units

Affordable Housing

In the previous Budget of 2019, the government provided an additional deduction of interest, amounting to Rs 1.5 lakh, for loan taken to purchase an affordable house.

Finance Minister proposed to extend the eligibility of this deduction by one more year, to March 31, 2022.

Further, to keep up the supply of affordable houses, FM proposed that affordable housing projects can avail a tax holiday for one more year – till March 31, 2022.

To promote supply of Affordable Rental Housing for migrant workers, Sitharaman proposed to allow tax exemption for notified Affordable Rental Housing Projects too.

Rel Estate Investment Trusts (REITs)

A real estate investment trusts (REIT) owns and operate income producing real estates, REITs own many types of commercial real estates ranging from office, apartments, building, to ware houses. hospitals, shopping centers, hotels and commercial forests.

Debt Financing of InVITs (Infrastructure Investment Trust) and REITs by Foreign Portfolio Investors will be enabled by making suitable amendments in the relevant legislations. This will further ease access of finance to InVITS and REITs thus augmenting funds for infrastructure and real estate sectors.

In the previous Budget, the government had abolished the Dividend Distribution Tax (DDT) in order to incentivise investment. Dividend was made taxable in the hands of shareholders. Now, in order to provide ease of compliance, FM proposed to make dividend payment to REIT/ InvIT exempt from TDS.

Further, as the amount of dividend income cannot be estimated correctly by the shareholders for paying advance tax, FM proposed to provide that advance tax liability on dividend income shall arise only after the declaration/payment of dividend. Also, for Foreign Portfolio Investors, FM proposed to enable deduction of tax on dividend income at lower treaty rate

Construction Workers

To further extend our efforts towards the unorganised labour force migrant workers particularly, FM proposed to launch a portal that will collect relevant information on gig, building, and construction-workers among others. This will help formulate Health, Housing, Skill, Insurance, Credit, and food schemes for migrant workers.

Reference: ET Realty