New Delhi: The government has announced relief in income tax to the realty sector . This will help in the sale of unsold residential houses worth up to Rs 2 crore. Buyers are allowed to buy houses below 20% of the circle rate. The circle rate is the value set by the government at which the property is registered. Agreement values, on the other hand, are prices set between the builder and the buyer.
The price of unsold houses in many cities has fallen below the circle rate due to the economic downturn. The market rate in these cities is much lower than the circle rate. With the announcement of the government, the developer can reduce the price of these units. This can also increase demand and sell unsold houses quickly.
What does the new ad mean?
Previously, if a developer sold a property below the circle rate, both the buyer and the seller had to pay tax on the difference between the circle rate and the agreement value. Last year, the government allowed developers to sell flats at 10% of the circle rate. There is no additional tax on this. The government has now widened the gap from 10 per cent to 20 per cent. This benefit will be available till June 30, 2021.
Generally, when sales are below the circle rate, the government calculates the profit and tax at the circle rate. Now if the developer sells at a rate 20% below the circle rate, he will not have to pay any additional tax. In this way, the developer can also pass on the benefit to the buyer. The price of unsold houses could remain low for the next 7 months.
How many unsold houses are there in the country?
According to experts, the number of unsold houses in the country's top eight cities is 9.32 lakh and 94 per cent of them are worth less than Rs 2 crore. The government's decision could benefit areas where the current market rate is lower than the circle rate. However, this is not the case in most cities. In most cities, the circle rate is lower than the current market. However, relief from income tax can help developers reduce prices.
How will the government's announcement help?
The idea behind the circle rate was to reduce cash in real estate transactions and thus prevent revenue loss to the government. But in many cities, real estate prices have fallen 10 to 20 percent below the circle rate. In such a situation the industry is having difficulty in dealing. If they sell their unit at a price 15 to 20 below the circle rate, the government will not consider it when calculating profits and taxes. However, this gap has now been widened to 20 per cent. Experts say this will boost the real estate sector and help developers reduce prices and sell unsold homes.
How will home buyers get help?
The biggest benefit will be in the form of taxes. Now you can buy a house at 20% lower than the circle rate and you don't have to pay any extra tax for this. The government's announcement is expected to bring down real estate prices. The price for disposal of houses sold by the developer can be reduced by 20 per cent from the circle rate. Buyers can negotiate where developers do not lower prices. Buyers will also save on stamp duty as they will register their flats at a lower price.
These benefits will only be available until June 2021. Those who want to buy a house for the first time and who do not have any financial problems can buy a house. Interest rates are also low now and are not expected to rise in the coming days, so their installment will also be lower.
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