Real State sector Rejoices as Government offers Tax Relief Till 30th June 2021!

Real State sector Rejoices as Government offers Tax Relief Till 30th June 2021

The recent tax relief announced by the government will help builders in clearing unsold inventory of residential units. It will also boost demand from home buyers as part of the stimulus package which is aimed at recovering the economy.

The move involves modifying the Income Tax Act that will allow a 20% differential between the actual sale price of land or building and the stamp duty value. At present, the Income Tax Act specifies that the actual sale price is used to calculate profits and gains from a sale if the stamp duty value does not exceed the sale value by 5% (10% from 1st April 2020). It is this permissible differential between the sale price and the stamp duty value that is now being raised to 20% because of the market conditions.

However, it must be noted that it has been decided to increase the differential to 20% under section 43CA of the Income Tax Act for the period till 30th June 2021, only in such cases where the primary sale of residential units is up to the value of ₹ 2 crores.

This no doubt will reduce the hardships which both the buyers as well as the developers face and would help in clearing unsold inventory. It is a step that will help the middle class at a time when the housing sector is witnessing a supply-side boom while people have no incentive to buy. The government on its part has now offered an incentive to buy in terms of income tax relief which no doubt will prove to be beneficial for both builders and house buyers and will help the real estate sector tide over the challenges posed by the COVID-19 pandemic.

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