Budget-2017 – Proposals that are likely to influence Real Estate Mumbai
Budget-2017 – Proposals that are likely to influence Real Estate Mumbai
Between 8th November and 30th December 2016, deposits between 2 lakh Rupees and 80 lakh Rupees were made in about 1.09 crore accounts with an average deposit size of Rs. 5.03 lakh.
Deposits of more than 80 lakh were made in 1.48 lakh accounts with average deposit size of Rs.3.31 crores.
Budget 2017 Real Estate: PROMOTING AFFORDABLE HOUSING AND REAL ESTATE SECTOR
Under the scheme for profit-linked, income tax deduction for the promotion of affordable housing instead of built up area, carpet area of 30 and 60 sq.mtr. will be counted.
The 30 sq.mt. the limit will apply only in case of municipal limits of 4metropolitan cities while for the rest of the country including the peripheral areas of metros, limit of 60 sq.mt. will apply.
For builders, who treat constructed buildings as stock-in-trade, tax on notional rental income will only apply after one year of the end of the year in which completion certificate is received
Time Limit of completing construction of the house is increased to 5 years from 3 years for the purpose of claiming Interest on self-occupied property under sec 24.
Budget 2017 Real Estate: CAPITAL GAIN
Reduction in the holding period for computing long-term capital gains from transfer of immovable property from 3 years to 2 years.
Also, the base year for indexation is proposed to be shifted from 1.4.1981 to1.4.2001 for all classes of assets including immovable property.
For Joint Development Agreement signed for the development of the property, the liability to pay capital gain tax will arise in the year, the project is completed.
Exemption from capital gain tax for persons holding land on 2.6.2014, the date on which the State of Andhra Pradesh was reorganized, and whose land is being pooled for the creation of a capital city of Andhra Pradesh under the Government scheme.
List of certain further bonds issued to invest into the capital gain bond as prescribed under section 54EC of the Income Tax Act.
Long term capital gain exemption is available if STT payment is made at the time of acquisition of such shares, where they have been acquired after 1st October 2004.
Deemed sale value for sale of unquoted shares is introduced and to be taxed at fair value under Sec 50CA.
Budget 2017 Real Estate: MEASURES FOR STIMULATING GROWTH
Concessional withholding rate of 5% charged on interest earned by foreign entities in external commercial borrowings or in bonds and Government securities is extended to 30.6.2020. This benefit is also extended to RupeeDenominated (Masala) Bonds.
For the purpose of carry forward of losses in respect of start-ups, the condition of the continuous holding of 51% of voting rights has been relaxed subject to the condition that the holding of the original promoter/promoters continues. Also, the profit (linked deduction)exemption available to the start-ups for 3 years out of 5 years is changed to 3 years out of 7 years.
MAT credit is allowed to be carried forward up to a period of 15 years instead of 10 years at present
Allowable provision for Non-Performing Asset of Banks increased from7.5% to 8.5%. Interest is taxable on the actual receipt instead of accrual basis. In respect of NPA accounts of all non-scheduled cooperative banks also to be treated at par with scheduled banks
Budget 2017 Real Estate: PROMOTING DIGITAL ECONOMY
Under a scheme of presumptive income for small and medium taxpayers whose turnover is up to 2 crores, the present 8% of their turnover which is counted as presumptive income is reduced to 6% in respect of turnover earned by non-cash transactions.
No transaction above Rs.3 lakh would be permitted in cash subject to certain exceptions.
Under the scheme for presumptive taxation for professionals with receipt up to Rs.50 lakhs p.a. advance tax can be paid in one installment instead of four.
Budget 2017 Real Estate: Transparency In Electoral Funding
Need to cleanse the system of political funding in India
The maximum amount of cash donation which a political party can receive is of Rs2000/- from one person instead of Rs.20,000/- at present.
Political parties will be entitled to receive donations by cheque or digital mode from their donors.
Amendment to the Reserve Bank of India Act, to enable the issuance of electoral bonds in accordance with a scheme that the Government of India would frame in this regard.
Every political party would have to file its return within the time prescribed in accordance with the provision of the Income-tax Act
Existing exemption to the political parties from payment of income-tax would be available only subject to the fulfillment of these conditions.
Budget 2017 Real Estate: EASE OF DOING BUSINESS
Scope of domestic transfer pricing restricted to only if one of the entities involved in related party transaction enjoys specified profit-linked deduction
Threshold limit for an audit of business entities who opt for presumptive income scheme increased from Rs.1 crore to Rs. 2 crores.
Similarly, the threshold for maintenance of books for individuals and HUF increased from a turnover of 10 lakhs to 25 lakhs or income from 1.2 lakhs to 2.5 lakhs.
Foreign Portfolio Investor (FPI) Category I & II exempted from indirect transfer provision. Indirect transfer provision shall not apply in the case of redemption of shares or interests outside India as a result of or arising out of redemption or sale of investment in India which is chargeable to tax in India.
Cash expenditures limits were reduced from Rs.20,000/- to Rs. 10,000/-.
Small companies having turnover below 50 Crores, then company need to pay 25% of taxes instead of 30%.
Commission payable to individual insurance agents exempt from the requirement of TDS subject to their filing a self-declaration that their income is below taxable limit.[Section 194H]
Also the time for completion of scrutiny assessments is being compressed further from 21 months to 18 months for Assessment Year 2018-19 and further to 12 months for Assessment Year 2019-20 and thereafter.
Budget 2017 Real Estate: PERSONAL INCOME-TAX
Existing rate of taxation for individual assesses between income of Rs.2.5 lakhs to 5 lakhs reduced to 5% from the present rate of 10%
Surcharge of 10% of tax payable on categories of individuals whose annual taxable income is between Rs. 50 lakhs and Rs. 1 crore
Simple one-page form to be filed as Income Tax Return for the category of individuals having taxable income up to Rs. 5 lakhs other than business income.
Appeal to all citizens of India to contribute to Nation Building by making a small payment of 5% tax if their income is falling in the lowest slab of 2.5lakhs to 5 lakhs.
Self-employed can also claim 20% contribution to NPS as a deduction.
Budget 2017 Real Estate: Goods And Service Tax
Basic customs duty on LNG reduced from 5% to 2.5%.
Miniaturised POS card reader for m-POS (other than mobile phones or Tablet computers), micro ATM standards version 1.5.1, Finger Print Readers/ Scanners and Iris Scanners and on their parts and components for the manufacture of such devices to be exempt from BCD, Excise/CV duty and SAD.
The GST Council has finalized its recommendations on almost all the issues based on consensus on the basis of 9 meetings held.
Preparation of IT system for GST is also on the schedule.
The extensive reach-out efforts to trade and industry for GST will start from 1st April 2017 to make them aware of the new taxation system.
RAPID (Revenue, Accountability, Probity, Information and Digitisation)
Maximize efforts for e-assessment in the coming year
Enforcing greater accountability of officers of Tax Department for specific acts of commission and omission.
Other factors in Budget 2017 for Real Estate
- No Scrutiny for new cases in the first year provided no specific information received for scrutiny, like sale and purchase of property or any other such transactions.
- No Retrospective amendments.
- No benefits are taken away from the existing provisions.
- No change in the time limit in the filing of appeal before the CIT (A), ITAT, High Court and Supreme Court.
- No Change in the limit of holding of Jewelry.
- No changes in reopening of cases.
- No amendment relating to accountability of government officer or public servants.
- No guidelines or directions to the assessing officer on account of demonetization of money.
- No introduction of Banking Transaction Tax.
- Inherent Tax not introduces – Estate Duty.
- No changes in basic exemption limits. And no further substantial changes in tax rates.
- Reason to believe for authorizing a search will not be disclosed to any person including appellate tribunal.
- Rebate of Rs. Rs.2500 only available till Rs. 3.5 Lacs.
- Time for filing of revised return of income is reduced.
- Before amendment: 1 year from completion of Assessment Year
- After Amendment: 1 year from completion of financial year
- Charitable Trust can receive a donation in cash up to Rs.2000/- instead of Rs 10000.
TDS have to be deducted @ 5% on Rent paid exceeding Rs 50,000 per month by individual or HUF, other than those whose books of account are required to be audited. If Deducted, then have to deposited only once in a financial year through a challans cum- statement. Further, the deductor shall not be required to obtain TAN or file any separate TDS return for this purpose.
Interest paid by an Indian company or permanent establishment of a foreign company, in excess of thirty percent of earnings before interest, taxes, depreciation and amortization (EBITDA), or interest paid to its associated enterprise, whichever is less, shall not be allowed as a deduction in computing its taxable profit. It is also proposed to allow carry forward and set off of the interest so disallowed for eight assessment years.
Set off of loss from house property against income under any other head during the current year up to Rs 2 Lakhs is allowed. If not set off, it will be allowed to be carried forward for set off against house property income for eight assessment years.
Assessing Officer not to process the return and thus withhold the refund in a case where the return is selected for scrutiny.It is however proposed that in cases where the grant of refund is likely to adversely affect the interest of revenue, it can be withheld with the approval of the higher authority after recording the reasons in writing.
If an accountant or a merchant banker or a registered valuer, furnishes incorrect information in a report or certificate, he shall be liable to a penalty of Rs 10,000 for each such default.
There will be provision for grant of interest in the case of refund of excess payment of TDS.
It is proposed to merge the Authority for Advance Ruling (AAR) for Income- Tax with AAR for
Customs, Central Excise, and Service Tax; and create common AAR
Arrears of rent realized in a subsequent year will be taxed under house property even if the property is no longer exist at that time and standard deduction @ 30% is allowed.
TDS in 194J amended, now 2% TDS instead of 10%.
The scope of section 56 will be widened and will also cover any kind of gifts in cash or kind or for no consideration with few exemptions and exception
MAT book profit calculation also amended
Disallowance of expenditure from income from other sources if TDS is not deducted
New Sec 234F in lieu of Sec 271F – Fees for filing return after due date (31 Jul – non-audited 30 Sep audited)
(1) by 31 Dec –Rs 5000
(2) after 31 Dec – Rs 10000
If Income does not exceed Rs 500000 – then only Rs 1000, Effectively will discipline return filing by due date
In absence of PAN, the rate of TCS will be twice of the extent rate or 5%, whichever is higher. Sec.206CC.
New Section 269ST introduced whereby Rs three lakh in cash cannot be received on a single day or in respect of the single transaction.
If you are the first-time earner and draws a salary of Rs. 3 Lakhs and Rs. 5 lakhs, then only 2.5% tax will be applicable instead of 5%. If you are making below Rs 3 lakh per year, you don’t have to pay any tax whatsoever.