Consumer spending rebounded in key sectors during the Christmas season after harsh months of lockdown and the economy appears to be finally on the road to recovery. Real estate is among the sectors that have seen reasonable interest after being almost paralyzed by the economic slowdown caused by the pandemic.
A recent survey by Magicbricks Property Buyer indicated that the holiday season has provided a huge boost to the real estate sector. The government considered that the recovery in the real estate sector would provide a significant boost to the economic recovery, so the latest phase of stimulus, the Atmanirbhar Bharat 3.0 package, expanded the focus on the sector.
Some real estate market experts say this is the best time to buy a home, citing several reasons. The main reason is the reduction in property prices and the second reason is the new tax reduction announced to buyers and developers under the Atmanirbhar Bharat 3.0 stimulus package.
What is the benefit for home buyers?
Individuals who wish to purchase a new home or residential property (primary purchase) valued at up to Rs 2 million will receive exemption from income tax as part of the new stimulus package. Home buyers will have the remainder until June 30, 2021.
Finance Minister Nirmala Sitraman announced that the acceptable difference between the circle price and the deal value when buying or selling real estate is being raised. Therefore, the difference has now risen from 10 percent to 20 percent until the aforementioned deadline.
What is the fee for the circuit?
The circular rate can be defined as the minimum price at which any real estate asset must be registered when it is transferred from the seller to the buyer. These rates vary and are set by state governments; These rates are subject to revision from time to time.
It should be noted that the circular rate also has a role in calculating the income tax payable on capital gains related to the sale or purchase of real estate.
Generally, the speed of the circuit is less than the true value of the convention. However, if the value of the transaction is less than the circuit rate, a difference of 10 percent is allowed as a tax relief under article 43a of the Income Tax Law. However, according to the new announcement, the 20 percent difference will now be allowed.
Residential property buyers and sellers may note that this applies only to the base sale of condos valued at Rs 2 million. Many real estate companies have welcomed the government's decision because they believe it will provide a large income tax benefit to home buyers.
ANAROCK Property Consultants President Anuj Puri said the limited-time offer will benefit both developers and home buyers.
"For home buyers, there is clearly an additional financial benefit to rounding off current offers and discounts. Additionally, the resulting dilution of up to 20 percent for home buyers under Section 56 (2) (x) of the Information Technology Law for that period will drive demand, especially in affordable and mid-range sectors. "
"For developers, this move will help eliminate unsold stock. According to ANAROCK research, there are approximately 5.45 lakh of unsold units in the 7 largest cities priced at Rs 1.5 crore, while others 49,290 units are between Rs 1.5 crore and Rs 2.5 crore ".
What is the tax advantage?
For example, keep in mind that a person has bought a house for Rs 80 lakh. However, the real estate rate according to the circuit rate is Rs 90 lakh. Income tax laws state that if the difference between the actual sales price and the circular rate value exceeds 10 percent, the developer will need to consider selling at Rs 90 lakh to calculate the profit.
The home buyer must show the difference, Rs 10 lakh in this case, as "income from other sources" and pay the tax accordingly. If you look at the example above, the difference between the real value of your home and the value of the circular rate is 12.5 percent.
According to the new government announcement, the difference of Rs 10 lakh will not be considered income in the hands of the home buyer. While the difference in the example above is 12.5 percent, the difference of up to 20 percent qualifies for tax benefits under the new tax benefits announced to home buyers
under the Atmanirbhar 3.0 package.
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