The Government of India will present the Budget 2019 in the Parliament on the 5th of July. With the days closing by, sources are speculating that the Government of India is pondering on introducing new income tax benefits, lowering the ‘housing loan interest rates’ on the ‘Affordable Housing’ sector and restoring benefits for Home Buyers Guide who buy a second home.
The new Finance Minister is eyeing growth in the housing sector as a means to spur the slowing economy and conceive more jobs. The Government is considering various reforms that could mitigate the declining economy which could include the Lowest Home Loan Interest Rates of all time.
Firstly, increasing the income tax benefits on the housing sector is going to be a major reform. This move shall encourage more buying. Secondly, lowering the housing loan interest rates in the ‘Affordable Housing’ sector and making housing loan eligibility
easy for homebuyers looking to buy properties in the affordable housing sector.
These developments have come forth after a recent meet on key points in Budget 2019. Here, it was concluded that several incentives must be offered to the housing sector for its growth to be better than ever.
Top officials confirm that after detailed discussions, officials have given out a comprehensive proposal & that the final call on this will be taken in the final days before the Budget.
With India’s GDP slowing down to 6.8% for FY19, Policymakers are in a rescue overdrive which is why they have envisaged the housing sector as the means to rapidly reverse the economic slowdown. Previously, The NDA Government had increased the maximum income tax deduction for interest paid on loan for a self-occupied house from Rs
1.5 lakh to Rs 2 Lakh in the 2014 Budget. The newly elected NDA Government is also expected to take strides in this regard. Apart from the above-mentioned scenarios, the Government is contemplating reintroducing benefits for another important scenario.
Previously, The NDA Government had increased the maximum income tax deduction for interest paid on loan for a self-occupied house from Rs 1.5 lakh to Rs 2 Lakh in the 2014 Budget. The newly elected NDA Government is also expected to take strides in this regard. Apart from the above-mentioned scenarios, the Government is contemplating reintroducing benefits for another important scenario.
For Home Buyers who are looking to buy their second house, the Government is set to restore the income tax benefits that come with the purchase.
Previously, homeowners having a second house could claim limitless tax deductions for the interest paid on housing loans for over a year. Since a loss arose due to the difference in the rental income and the interest
paid, the homeowner would be eligible for income tax compensation against other income.
In FY2018, the previous Budget had capped this compensation at Rs 2 Lakhs with the option of carrying forward the loss for eight assessment
However, it was observed that when there were lower rental yields, the interest that was being paid was unable to offset the loss that the interest
Income tax experts say, reverting back to the previous norms is advisable as it benefited taxpayers in India the most. Real Estate is a popular investment choice amongst many Indians, hence providing benefits for investments in Real Estate is essential.
The Real Estate sector in India has accumulated a huge inventory of unsold properties over the years.
These tax reforms and the government’s boost to affordable housing will motivate homebuyers to buy homes and invest more in Residential Real Estate.
Real Estate developers will have a sigh of relief as they shall enjoy the interest relief period as well.
With new income tax benefits, there will be a higher demand.
The Higher demand for homes will help Real Estate developers clear their unsold properties & start construction of new properties.A rise in new construction will help create new jobs & help the economy sustain for long.
All in all, Homebuyers are set to enjoy the new reforms especially on the Affordable Housing sector, that will be implemented in the eagerly awaited BUDGET 2019.