New Delhi: Bringing cheers for the housing sector, Finance Minister Arun Jaitley announced changes in the capital gain taxation provisions in respect of land and building.
He said that the holding period for considering gain from immovable property is being reduced to two years from existing three years now.
Also, the base year for indexation is proposed to be shifted from 1.4.1981 to 1.4.2001 for all classes of assets including immovable property.
Jaitley stated that government also plans to extend the basket of financial instruments in which the capital gains can be invested without payment of tax. For Joint Development Agreement signed for development of property, the liability to pay capital gain tax will arise in the year the project is completed.
Jaitley added that the scheme for profit linked income tax exemption for promoters of affordable housing will be broad based.
Presenting his fourth Union Budget, Jaitley said that instead of built-up area of 30 and 60 sq. mtrs., the carpet area of 30 and 60 sq. mtr. will be counted.
Mentioning the measures for promoting affordable housing in real estate sector, Jaitley added that the 30 sq. mtr. will apply only in case of municipal limits of four metropolitan cities while for the rest of the country limit of 60 sq. mtr. will apply.
In order to be eligible, the scheme was to be completed in three years after commencement but now, it will be extended to five years.
At present, the houses which are unoccupied after getting completion certificates are subjected to tax on notional rental income.
For builders for whom the constructed buildings are stock-in-trade, Jaitley proposed to apply this rule only after the end of the year in which completion certificate is received so as to give the builders some breathing time for liquidating their inventory.
In respect of new capital for State of Andhra Pradesh, persons holding land on 2.6.2014 whose land is being pooled for creation of new capital city under the Government Scheme, will be exempted from capital gain tax.
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