Budget 2021 Decoded for NRIs, Senior Citizens & Homebuyers
“This is a well-balanced, progressive, and revolutionary Budget focused on growth and welfare. It will act towards the restoration of normalcy to the movement of people and their livelihood activities,” said Murali Malayappan, Chairman and Managing Director, Shriram Properties Ltd.
So, how does this Budget impact the real estate industry?
More importantly, how does it help prospective homebuyers, investors, senior citizens, and NRIs? We asked the experts to help us decode the Budget.
What FM said: “When Non-Resident Indians return to India, they have issues with respect to their accrued incomes in their foreign retirement accounts. This is usually due to a mismatch in taxation periods. They also face difficulties in getting credit for Indian taxes in foreign jurisdictions. I propose to notify rules for removing their hardship of double taxation.”
What it means: The announcement seeks to remove double taxation for Non-Resident Indians (NRIs) on income accrued through foreign retirement benefits accounts. The tax department will notify rules to remove hardships of double taxation faced by NRIs.
What is double taxation? As the name suggests, NRIs are taxed on the same income twice, both in India and the country of residence. In India, they are taxed on income earned or accrued within India.
How the industry reacted?
Welcoming the move, Sanjay Dutt, MD & CEO, Tata Realty and Infrastructure Limited said, “Acknowledging the role of NRIs, the government’s decision to remove double taxation will improve the overall sentiments significantly.”
Reiterating the same, Rohit Poddar, Managing Director, Poddar Housing and Development Ltd. said, “Giving relief to NRIs from double taxation will give a sentiment boost to the real estate sector.”
For senior citizens
What FM said: “In the 75th year of Independence of our country, we shall reduce the compliance burden on senior citizens. For senior citizens who only have a pension and interest income, I propose exemption of filing of income tax returns.”
What it means: Well, the senior citizens above 75 years with only pension income have now been exempted from filing the Income Tax returns.
How the industry reacted?
“Senior citizens constitute 9% of the population. This number will progressively increase to be 20% by 2050. Our seniors are currently battling high inflation, dropping interest rates on savings, increasing medical expenses, and the second-highest GST slab rates on in-home services. I am not sure if relief from filing returns on income tax is adequate recognition for a lifetime of service to the nation,” said Mohit Nirula, CEO, Columbia Pacific Communities.
Also Read: Union Budget 2021-22: Infrastructure Receives the Lion’s Share
What FM said: “For realisation of the goal of ‘Housing for All’ and affordable housing, in the last budget I had announced an additional deduction of up to Rs 1,50,000 for interest paid on loans taken for purchase of an affordable house. The deduction was allowed on housing loans sanctioned on or before 31st March, 2020. In order to ensure that more persons avail this benefit, I propose to extend the date of loan sanction for availing this additional deduction by one more year.
“Further, in order to boost the supply of affordable houses in the country, a tax holiday is provided on the profits earned by developers of affordable housing project approved by 31st March, 2020. In order to promote the affordable housing projects, I propose to extend the date of approval of affordable housing projects for availing this tax holiday by one more year.”
What it means: The period to avail additional tax benefits of Rs 1.5 lakh for interest paid on home loan for the purchase of an affordable house has been extended till March 31, 2022. This benefit is over and above the tax advantage of Rs 2 Lakh available under Section 24 (B) of the Income Tax Act.
Further, to keep up the supply of affordable housing, the finance minister proposed that affordable housing projects can avail a tax holiday for another year till March 31, 2022.
How the industry reacted?
“Extending the tax holiday for another year till March 31, 2022, for affordable housing projects is a positive step in achieving the government’s objective of Housing for all by 2022. Additionally, providing a deduction for the interest of Rs 1.5 Lakh paid for the loan taken for the purchase of an affordable house to March 31, 2022, will motivate homebuyers to purchase their dream home as they will be able to repay their loans much faster thereby speeding up the residential sales. We welcome these incentives as it will boost the demand and supply in the affordable housing segment,” said Nishant Deshmukh, Managing Director of Sugee Group.
Budget 2021 also proposed to make a dividend payment to REITs and InvITs exempt from tax deducted at source (TDS). REITs and InvITs are vehicles that allow developers to monetize revenue-generating real estate and infrastructure assets.
Welcoming the move, Anshuman Magazine, Co-Chairman, CII National Committee on Real Estate & Housing and Chairman and CEO – India, South East Asia, Middle East and Africa, CBRE said, “Proposing to make dividend payments to REIT and Infrastructure investment trusts exempt from TDS this year is another great move as it will help address the liquidity situation in the real estate industry.”
Although several proposals were announced for the benefit of taxpayers, there was no change in income tax slab rates.
“Disposable income is a substantial constraint on demand so personal tax relief must be addressed by revisiting the tax slabs and also increasing the deduction limit under Section 80C. Such benefits will provide crucial support to the real estate sector,” said Rakesh Reddy, Director, Aparna Constructions & Estates.
Echoing similar views, Surendra Hiranandani, Chairman and Managing Director, House of Hiranandani said, “The government could have given a further boost to real estate with few additional reforms. There have been many pressing concerns in the sector that have not been addressed such as easing liquidity, reduction in levies/taxes, tax deductions on home loans to give impetus to buyer sentiment, granting of industry status to the overall real estate sector, implementation of single window clearance, amongst others.”