Real estate professionals are getting more and more excited about the potential tax perks as the Union Budget 2024 announcement draws near. Among the most anticipated improvements are a rise in tax exemptions, an emphasis on affordable housing and infrastructure, and a streamlining of the capital gains tax. Will these anticipated reforms, though, actually happen? This blog examines it in more detail.
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Some significant changes were made to the 2023 budget, such as the introduction of a new IT tax regime and a decrease in TDS for EPF withdrawals. Likewise, numerous professionals in the field are doing an in-depth examination of anticipated tax adjustments in the Union Budget 2024. Which may result in a sense of comfort for the average citizen. The aspirations of the real estate industry, which include tax exemptions, more financing for infrastructure, and simplified capital gains procedures, are not far behind. To gain a detailed understanding of all the anticipated tax improvements for the real estate industry from the Union Budget 2024, read this article.
Significant tax reforms are expected in the upcoming Union Budget 2024
Following the recently held elections, the Modi Government assumed power in India for the third time, with Mrs. Nirmala Sitharaman remaining in her role as Finance Minister. The newly elected government’s first comprehensive budget will be this one. The following tax measures are anticipated by the industry in the Union Budget 2024. Which is anticipated to be unveiled during the third week of July:
TDS reforms
The adjustment of the current TDS (Tax Deducted at Source) is one of the main expectations from the Union Budget 2024. The Rs 1.5 lakh ceiling under Section 80C has been unchanging for years and needs to be changed. Changes may also be made to the interest deduction for house loans. Which is currently capped at Rs 2 lakh for properties that are self-occupied. The destiny of Standard Deduction, which may be subject to revision in the Union Budget 2024, is closely watched by those in paid positions.
Income tax reassessment
In the Union Budget of 2024, an increase in the tax exemption from Rs 3 lakh to Rs 5 lakh is anticipated. If the new regime’s amended tax exemption is revealed. People making more than Rs 7.5 lakh will profit the most from it. Additionally, the average tax outlay may be lowered by Rs 10,000 as a result of the updated tax slabs.
Affordable housing
In India, real estate developers anticipate higher tax exemptions on rental revenue and home loan interest rates. In the Union Budget 2024–2025, the fraternity also anticipates an increase of the concept of affordable housing to Rs 75 lakh with a larger carpet space.
Experts also anticipate additional money for the Special Window for Affordable & Mid-Income Housing (SWAMIH) fund and the revival of programmes like the Credit Linked Subsidy Scheme (CLSS).
Increased Infrastructure funding
The urban infrastructure budget is expected to be boosted, according to the real estate industry. The PHD Chamber of Commerce and Industrial (PHDCCI) states that greater attention needs to be paid to Tier-2 cities—particularly the SMART cities—rural areas, and the interior regions of the nation. The penetration of ease of doing business can be improved in this way. Additionally, one might anticipate a stronger emphasis on infrastructure, particularly as it relates to roads, tunnels, and highways.
Tax on Capital Gains Simplified
The capital gains tax in India at the moment is convoluted, with varying holding periods for various asset classes. This makes it difficult to determine whether a “gain” was made over the long or short term. And once it is, different tax rates and surcharges apply. Disputes and lawsuits result from this frequently. Therefore, it is anticipated that the Union Budget 2024 will simplify the capital gains structure.
Furthermore, the long-term and short-term capital gains tax rates ought to be 10% and 15%, respectively.
Relief for senior citizens
Senior citizens anticipate changes to the lock-in durations under Section 80C for a range of assets, including:
- Fixed Deposits (FD)
- National Savings Certificates (NSC)
- Equity-linked Savings Scheme (ELSS)
Reducing lock-in periods is anticipated in order to meet older individuals’ liquidity needs, particularly with regard to their medical costs and general physical health. They will still be able to take advantage of tax savings and handle their investments more freely as a result.
Senior persons also expect the government to permit a deduction of Rs 50,000 for Mediclaim premiums or expenses due to the rising cost of healthcare. The threshold limit is set at Rs 1 lakh, if declared.
First-time homebuyers’ tax exemptions
It would be beneficial to reinstate tax breaks for first-time homebuyers, particularly for those in the modest budget category. The additional interest deductions available to first-time homeowners under Sections 80EEA and 80EE are now capped at Rs 1,50,000 and Rs 50,000, respectively.
Industry analysts suggest other modifications in addition to the tax revisions stated above. The Government should reevaluate the loss set-off limit under the income tax head of house property”. There was no such cap until the Finance Act of 2017, when the government limited the annual loss to Rs 2 lakh under the heading “House Property”. Which can be deducted from income from other sources. In order to encourage rental housing and attract new investors to the industry, this cap ought to be raised or eliminated.”
In addition, given the recent spike in borrowing prices and high rates of inflation, tax breaks are desperately needed. Particularly for those purchasing inexpensive and mid-segment homes, to help them get through their financial difficulties.
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