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Budget 2014: expectations in the real estate sector

2 Jul 2014

Though the Prime Minister's recent announcement of ‘housing for all by 2022’ has set an ambitious target in India, it has significantly raised hopes and expectations for the real estate sector. Taxand India takes a look at the plans for the new enabling tax regime.

An enabling tax regime (allowing for pass through taxation) that will make Real Estate Investment Trusts (REITs) a reality is widely being anticipated, and if the expectation fructifies, it could be a game changer. Here are some other
expectations from the sector:

  • Revival of Special Economic Zones (SEZs) by restoring exemption from Minimum Alternate Tax (MAT) and Dividend Distribution Tax (DDT) that was available to developers and units in SEZs before withdrawal in 2011
  • Extension of tax holiday under section 80IB of the Income tax Act to new affordable housing projects
  • Clarification on taxation of Joint Development Agreements (JDAs) to settle the ambiguity on capital gains tax incidence for land owners
  • Increased limit under section 80C of the Income tax Act from Rs 100,000 to Rs 300,000 to encourage higher savings and boost new home purchases
  • Increased limit for housing loan interest deduction for self-occupied property which has remained at Rs 150,000 since 2001 to Rs 500,000 to encourage buying new homes and extend tax savings to existing borrowers

Discover more: Union Budget 2014 & the expectations in the real estate sector

Your Taxand contact for further queries is:
Mukesh Butani
T: +91 124 339 5010

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Also published in Thomson Reuters' Taxnet Pro, 07 July 2014 

Taxand's Take

Rising inflation, high interest rates, a slow economy and correspondingly poor sentiments of buyers have impacted this sector disproportionately. With a stable Government now in place the industry seems confident of an overall improvement in the economic scenario.

Taxand's Take Author

Mukesh Butani
Taxand Board member

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