6 Measures in Union Budget 2017 for Affordable Housing in India; Land Owners of AP Region Exempted from Capital Gain

The Union Budget 2017 was laid before the Parliament today by the Hon’ble Finance Minister of India. The salient features of Tax proposals for Affordable Housing are summarized below:

Affordable Housing:

1. Three concessions in the scheme of Income Tax exemption for affordable housing:

- Area of 30 and 60 Sq.mtr. to be counted as carpet area and not built-up area;

- 30 Sq.mtr. only in 4 metropolitan city limits and 60 Sq.mtr. for the rest of the country;

- Completion period extended from 3 years to 5 years.

           

2. Tax on Notional rental income for builders to be calculated only after 1 year from the end of the year in which completion certificate is received.

           

3. Changes in Capital Gain taxation for immovable properties:

- Holding period reduce for computation of long term capital gain from three years to two years

- The base year for counting the cost of property shifted from 1.4.1981 to 1.4.2001 for all classes of assets including immovable property.

4. Basket of the financial instrument in which capital gain can be invested without payment of tax to be expanded.

5.For joint development agreement, the liability to pay capital gain tax will arise in the year in which project is completed.

 6. For Andhra Pradesh capital, land belonging to owners as on 2.6.2014 to be exempted from capital gain if the same is offered under the land-pooling mechanism.