Real estate developers on Thursday hailed the government's tax relief, saying the move will boost housing demand and help builders to clear their unsold inventories, estimated at around 6-7 lakh units in major cities.
The government relaxed income tax rules to allow the sale of primary residential units of up to Rs 2 crore value below the circle rate.
Earlier, only 10 per cent difference between the circle rate and the agreement value was allowed but now the government has increased the differential to 20 per cent. This is applicable till June 2021.
Commenting on the development, CREDAI National Chairman Jaxay Shah said: "It is a very welcome step and leads to offload the inventories as due to COVID-19, the price of properties goes down in some areas below circle rates."
"Now up to 20 per cent reduction below circle rates, the developer can sell the property and the home buyer can buy the property without having any liability Under Section 43CA in case of developer and Under Section 56 for individual home buyer," he said.
Anarock Chairman Anuj Puri said: The increase in the differential between circle rates and agreement value - from 10 per cent to 20 per cent (under Section 43CA) is indeed a good move. This limited-period offer (up to 30 June 2021) will benefit both developers and homebuyers."
For homebuyers, it is a clear added financial benefit to round off the existing offers and discounts, he said, the move will help builders clear unsold stock.
As per ANAROCK Research, there are approx. 5.45 lakh unsold units across the top seven cities priced up to INR 1.5 crore while another 49,290 units priced between INR 1.5 crore to INR 2.5 crore.
The additional outlay of Rs 18,000 crore for PM Awas Yojana (PMAY Urban) is another welcome step towards fulfilling its vision of Housing for All by 2022, Puri said.
Piyush Bothra, co-founder and CFO Square Yards, said the increased outlay under PMAY (U) coupled with the increased gap vis-a-vis the circle rate of 20 per cent would give a significant boost to the real estate sales especially in the mid to low price brackets.
Mani Rangarajan, Group COO, Housing.com, Makaan.com & PropTiger, said the residential real estate will get a boost from the tax relief as the government has decided to increase the differential of circle rate and actual price from 10 per cent to 20 per cent for the sale of residential units of value up to Rs 2 crore.
"This relief will help the real estate sector to clear the unsold inventory, which is hovering at around 7,23,060 units as on September 30, 2020, in the top eight residential markets," he said.
Anshuman Magazine, Chairman and Chief Executive Officer - India, South East Asia, Middle East & Africa, CBRE said: " The announcement of additional outlay of Rs 18,000 crore for PM Awaas Yojana(urban) is a step in the right direction towards fulfilling the vision of Housing for all, which will lead to generating employment along with supporting other industries, having a multiplier effect on the economy. Income Tax relief for developers and home buyers will encourage transactions and attract first time homebuyers.
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