By Sarveshaa SB, Managing Director, BHADRA Group
The real estate sector in India is witnessing many reforms in the statutory procedure with the introduction of Real Estate (Regulations and Development) Act and enactment of a simpler taxation, viz., Goods and Services Tax Act. A recent development with the demonetization of high-value currency notes and Income Declaration Scheme (IDS) would significantly impact the overall economy in the near future.
Further, the Union budget 2017-18 is expected to offer more tax benefits, more incentives for home buyers, like increased deduction of the amount paid towards repayment of principal amount of housing loan, enhancement of limit on deduction of interest paid on housing loans etc., making the investment in real estate an ideal one.
Here are benefits expected from key reforms in the economy
Benefits of RERA to home buyer
Karnataka State Government is manifesting a regulation body in accordance with the Central RERA Act. The move will eliminate unorganized real estate players and regulate the sector to bring in clarity for both buyers and developers. The Indian Government is focusing on “housing for all”, smart cities and infrastructure development; the fulfillment of these goals will require to organise the real estate industry.
Benefits of GST to home buyer
Presently, services and goods procured for the construction of residential buildings are liable for payment of service tax and VAT, respectively up to 20 – 25% of the basic costs. On implementation of GST. a simplified tax structure, there will be clarity on appropriate rate of tax and an applicable single rate , which may result in the reduction of the tax burden on home buyer.
Benefits from Income Declaration Scheme to home buyer
The effect of IDS and demonetization has increased the tax base and as more people come into the tax net, the government will usher in a tax friendly environment. Lower rates of income tax, covering a wider base will ease out the tax complexities and encourage more compliance. A better tax structure will benefit home buyer with an expected reduction in direct and indirect taxes.
Benefits of Demonetization to home buyer
There would be an improved liquidity in the banking system, as deposits have increased due to demonetization. An estimate suggests, more than Rs. 6 lakh crores are expected roll into the formal banking system from the informal sector- the cash economy. The move will result in lower lending rates, as banks will lend aggressively. With the attractive interest rates, housing will be more affordable to all in a totally new environment within the ambit of the Real Estate Regulatory Authority.