The budget 2020 announced by the Finance Minister on 1st February from the floor of the Lok Sabha, had many unexpected gains for the real estate sector. Industry experts speculated many changes and provisions for the realty sector at large. However, not all demands caught the attention of the Finance Minister. Nevertheless, many vital announcements got made in the budget that will have a significant impact on the real estate sector. The lion’s share of this budget went to agriculture and allied development, yet the feeling for the real estate sector is positive.
Read on to know to some of the noticeable gains for the real estate sector and investors from Budget 2020.
Revised Tax Slabs, More Income at Disposal: Announcing new tax slabs comes as a relief for the taxpaying citizens. According to the new tax structure, if your earning is between Rs 5 lakh and Rs 15 lakh, you get to save some portion of your income. In the existing tax regime, if you are earning between Rs. 5-7.5 lakhs you would pay 20% as tax, while in the new system you get to save 10%. Similarly, if you are earning between Rs. 7.5-10 lakhs per year you will get to save 5% in the new tax slab as you will come in the 15% tax slab. Likewise, if total income ranges between Rs. 10-12 lakh annually, you pay 20% tax as against the existing 30%. The below table will give you a complete insight into it.
| Taxable Income Slab | Existing Rate | New Rate |
| Rs. 0-2.5 Lakh | Exempt | Exempt |
| Rs. 2.50-5 Lakh | 5% | 5% |
| Rs. 5-7.5 Lakh | 20% | 10% |
| Rs. 7.5-10 Lakh | 20% | 15% |
| Rs. 10-12.5 Lakh | 30% | 20% |
| Rs. 12.5-15 Lakh | 30% | 25% |
| Rs. 15 Lakh and above | 30% | 30% |
The new tax slabs will give the option to home buyers to save a little extra and invest a bit more. While the revised tax regime is not directly related to realty sector, it may push the fence-sitters to take the plunge. It will give the prospective investors some more liquidity, which they can utilise in saving for their home or in paying the home loan EMI. So, this tax simplification can generate new consumer demand.
New Guarantee Scheme for NBFCs & HFCs: The non-banking financial companies (NBFCs) and housing finance companies (HFCs) have started to play a significant role in financing the dream home of a buyer. In 2019, both NBFCs and HFCs faced a liquidity crisis. However, in the budget 2020, the government has come up with a proposal to enhance the credit guarantee scheme of NBFCs and HFCs. This credit guarantee provides the much-needed respite to the market, bring liquidity in the market and abolition of the Dividend Distribution Tax (DDT). The companies will not have to pay DDT; instead, the dividend will get taxed only for the recipients. This move by the government will boost the buyer sentiment reinstating their faith in the market.
Infrastructural Development: Several schemes and steps got announced to boost the infrastructure growth of the country. The proposed National Infrastructure Pipeline (NIP), which has Rs. 102 crore outlay will serve as an opportunity for the housing sector. There are 6500 new projects planned under NIP. Besides, 100 new airports, five new smart cities and strategic national highways got announced, which will have a significant impact on the real estate sector. This growth and development will provide the developers with the option to explore new location avenues and give the buyers more home buying options.
Extension of Support for Affordable Housing: In budget 2019, the finance minister announced tax benefit for affordable home buyers. Under section 80EEA, deduction of up to Rs. 1.5 lakh got offered against home loan interest payment. In an endeavour to boost affordable housing section, the deadline of this benefit got extended from March 2020 to March 2021. So, people buying a home under the affordable housing scheme can get the benefit for another year.
These direct and indirect provisions announced by the finance minister are creating a positive buyer and developer sentiment. More liquidity and new projects in various locations can reshape the sector in the coming financial year. So, if you were waiting for the budget to channelize investments in property, then now is the time to invest. The budget is out; the experts are optimistic, and overall sentiments are positive, giving you more than enough indications to make your next property investment.
If you are looking for an ultra-luxury dwelling in Bengaluru, then visit Valmark Apas. This project located strategically is a dream come true for any home buyer. It provides you with many luxurious amenities and tech-driven features that will make an investment in Valmark Apas much desirable. The select 112 apartments offer boutique facilities enticing every home buyer. There are also smart home features like FTTH connectivity, video door phone system, mood-setting, gas leak detector, bathroom occupancy sensor and provision for curtain automation. Know more about these luxury apartments in Bannerghatta road and start 2020 with the right investments.
The other project that is worth considering for investment is Valmark Orchard Square. Nearing completion, it can be a fine choice if you want to invest in a ready to move in project. It has also been awarded as the best mid-segment housing project 2019 by Commonfloor.com. It comes with many promising amenities and can be ideal for living or investment purpose. There are around 272 apartments spread over 3.25 acres with plenty of open space and green boulevard. Fast taking shape in JP Nagar 8th Phase of south Bangalore, you can come to explore the 2 and 3 BHK units and invest in this rustic neighbourhood. So, make the most of this favourable post-budget scenario and buy your dream property, this 2020.
Share your views on the budget 2020 and hope you are finding it favourable to make new real estate investments!
