The Finance Minister Nirmala Sitharaman has announced the Income Tax Relief for Developers, Home-Buyers to Boost Real Estate Demand as part of Atmanirbhar 3.0 stimulus measures to push economic growth. The first-time buyers of houses costing up to ₹ 2 crore will get income tax relief of up to 20 per cent and this will be available till June 30, 2021. “This will incentivize people to buy homes and bring down the excess inventory,” Nirmala Sitharaman said.
The Finance Minister also said that, Economic slowdown has led to decline in prices of residential unit. Presently Section 43CA of IT Act restricts differential between circle rate & agreement value @ 10% – Prices may actually be lower than this.
The Central Government has decided to increase the differential from 10% to 20% (under section 43CA) for the period from the date of the announcement to 30th June 2021 for only primary sale of residential units of value up to Rs 2 crores. Consequential Relief up to 20% shall also be allowed to buyers of these units under section 56(2)(x) of IT Act for the said period.
The necessary amendment to IT Act would be proposed in due course. This measure will reduce hardships faced by both home-buyers and developers and help in clearing the unsold inventory.