Budget 2019 proposals provide for a slew of benefits for property owners. In his Budget speech, Union Minister Piyush Goyal proposed to exempt levy of income tax on notional rent in case of a second self-occupied property. Among measures welcomed by tax experts was also the proposal to lift the threshold of rent payment without TDS – or tax deducted at source – by one-thirds to Rs. 2,40,000. The government has said that the move is aimed at providing relief to small tax payers.
Budget 2019: Benefits for home owners announced by government on February 1
TDS exemption on rent
The government proposed to hike the TDS exemption limit applicable to payment of rent from Rs. 1,80,000 to Rs. 2,40,000 per year. As per existing tax rules, the tenant other than entities including salaried individuals is required to deduct TDS on payment of rent above Rs. 1.8 lakh in a year. Once the new rules take effect, such TDS will become applicable only if the annual rent exceeds Rs. 2,40,000.
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With an aim to boost the real estate sector, it proposed to extend the period of exemption from tax on notional rent on unsold inventories from one year to two years. This period will be applicable from the end of the year in which the project is completed.
Housing for All
The government proposed to extend the benefits under Section 80(i)BA of the Income Tax Act by one year. That means all housing projects registered under the Real Estate Regulatory Act by March 31, 2020 would come under its ambit.
Under the government’s affordable housing scheme, projects with units up to a carpet area of 30 square metres in four metros, under certain conditions, benefit from a 100 per cent profit deduction.
Tax on notional rent exempt on second self-occupied house
The government has extended the benefit of rollover of capital gains from investment in one residential house to two residential houses under certain conditions. This benefit will apply to taxpayers having capital gains up to Rs. 2 crore and can be availed once in a lifetime, it noted.
“Considering the difficulty of the middle class having to maintain families at two locations on account of their job, children’s education, care of parents etc., I am proposing to exempt levy of income tax on notional rent on a second self-occupied house,” Mr Goyal said in his Budget speech.