In order to revive investment in the real estate sector and add feathers to the Indian economy, the Ministry of Finance is working on a plan to provide a 10-year tax holiday for realty developers on rental profits. The step has been suggested by real estate developers in a recently held meeting between them and the Finance Ministry.
According to the sources from the Ministry, the realtors have also been asked to submit a note on the rental housing business model, where expenses would be allowed to claim for the deduction, but the profit will be exempted from tax for 10 years.
The sources further informed that to perk up the investment in the realty sector, the ministry bodies have called for this meeting. All the takes from the meetings may likely to be infused in the upcoming Budget of 2019-20 which will be tabled in July. The newly formed reelected government will be taking oath today and may likely to start with more meetings soon.
In February this year, the GST Council has brought some good news for the homebuyers by reducing the GST rates on under construction projects from 12 percent to 5 percent and on affordable properties from 85 to 1% without an input tax credit.
The GST council also said that in case of currently developing i.e. under construction projects; to resolve the input tax credit issue, builders have an option to choose between old tax rates and the new tax rates.
During the meeting, developers also stressed on issues pertaining to liquidity crunch as well as restricting of loan so as to improve funding from financial institutions.