Latest IT laws that will affect home buyers’ decisions in Mumbai
It is that time of the year, when the budget 2020 will be announced and everyone is eager to know how it will affect real estate investment in India. Home buyers are most interested in knowing how the income tax laws will impact their decision to buy new flats for sale in Mumbai Now the pressing question is that what should they look for? These are some suggestions that could make a way for more residential property buyers which has become necessity in Mumbai.
Reduced GST rates
The government began the process of lessening the burden on buyers by reducing GST rates. This has come as a huge relief in the city where the cost of living is high and the middle class families have space constrains. In the case of affordable housing segment, the rates are as low as 1%. For the higher income groups, GST applicable is only 5% which is helping everyone to own a roof in the metro. This benefit is also assisting developers to complete projects. Several real estate companies in Mumbai are able to complete their inventory due to this reason. An additional issue that pertains to taxation for individual buyers has been cropping up. It refers to the EMIs that people have to pay when they take home loans.
What proposed solutions could be useful to get affordable flats?
Current scenario of taxation
The Income Tax Act in Section 80 c states that individuals and HUF are allowed to get 1.50 lakhs deduction claim for various items. It also includes repayment of home loans which are taken from banks. As of now the 80 c section also allows exemption for other items like NPS, employee provident fund, LIC premium, NSC and school fees for children. But an individual tends to exhaust the same and when it comes to housing loans they still have to shell out more for EMIs. The cost of flats for sale in Mumbai have increased manifold. It is very important that the government looks into this matter with consideration. The reduction of house loan from 80C should be removed. It can however be included separately. This deduction will contribute to genuine real estate investment in India. Already affordable homes in the eastern suburbs like Chembur are ready to get millennial buyers. They are the best potential for affordable Housing and they will also welcome the tax benefits that will reduce the pressure of repayment.
Rebates for individual tax payers
Under 87 A of IT Act, a rebate of INR 12,500.00 is available for individuals who earn below 5 lakhs. Tax payers who earn more than this amount tend to manipulate their income sheet to show banks that their income is less. This is done to be eligible for the rebate. The present government is trying to eliminate this manipulation for affordable housing schemes. Individual tax slabs as per income can be introduced and relief given for home loans. This will encourage young people to invest in homes early in life.
This information on taxable areas of home loans derived from online channels. If you are planning to invest in property in Mumbai, it is best to take a second opinion from an experienced property tax consultant.