Ritika Dangemoneycontrol.comIn the Union Budget 2015-16 Finance Minister Arun Jaitley today proposed to rationalise capital gains regime for real estate investment trusts (REITs) and Infrastructure Investment Trust (InvITs). Furthermore, Jaitley proposed to allow tax pass-through for alternate investment funds.
Speaking in the Lok Sabha Jaitley said: A large quantum of funds is locked up in various completed projects which need to be released to facilitate new infrastructure projects to take off. I therefore propose to rationalise the capital gains regime for the sponsors exiting at the time of listing of the units of REITs and InvITs, subject to payment of Securities Transaction Tax (STT). The rental income of REITs from their own assets will have pass through facility.
Apart from this, no major announcement was made for the sector which has been reeling under massive pressure hit by a demand slowdown in the past few years. High mortgage and home rates and an alarmingly high inventory level weakened consumer sentiment with most realty companies announcing dismal earnings.
High on the industry’s expectation list was providing an infrastructure status for the sector apart from giving tax clarity on real estate investment trusts (REITs). FM Jaitley had notified the listing of REITs in last year’s Budget, but experts have been awaiting clarity on dividend distribution tax (DDT) and an exemption from capital gains tax.
In what would come as a direct benefit to consumers, the real estate industry was also expecting an increase in the threshold for I-T exemption towards interest payment on home loans.
Furthermore, in a move to boost India’s lagging manufacturing sector, the realty industry wanted the minimum alternate tax (MAT) rate for special economic zones (SEZs) to be reduced and a complete exemption from DDT.
Here’s what the FM announced in Budget 2014:
- Jaitley announced incentives for REITs that would have pass through for the purpose of taxation.
- The FM increased the home loan rebate on self-occupied property from Rs 1,50,000 to Rs 2,00,000.
- The government relaxed FDI rules, gave incentive on home loans, offered tax sops on investment trusts and provided Rs 7,060 crore for the development of 100 smart cities.
- FM in his Budget 2014-15 also increased the allocation of Rural Housing Fund, run by National Housing Bank (NHB), to Rs 8,000 crore in this fiscal. Another Rs 4,000 was earmarked for NHB to increase the flow of cheaper credit for affordable housing for urban poor.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
