Union Budget 2024 Highlights - Income Tax, Real Estate

Union Budget 2024 Highlights - Income Tax, Real Estate

Introduction

The Union Budget 2024, presented by Finance Minister Nirmala Sitharaman, introduced several significant changes to the income tax regime, aimed at providing relief to taxpayers and stimulating economic growth. This blog explores the key highlights and implications of the new tax reforms, along with the government's efforts to boost the real estate sector and affordable housing.

Key Income Tax Reforms

1. Standard Deduction Increased:
   • The standard deduction has been raised from Rs 50,000 to Rs 75,000 under the new income tax regime. This move is expected to provide substantial relief to salaried individuals by reducing their taxable income.

1. Enhanced Deduction on Family Pension:
   • The deduction on family pension for pensioners has been increased from Rs 15,000 to Rs 25,000, offering additional financial support to retired individuals and their families.

1. Revised Income Tax Slabs:
   • The new income tax regime introduces revised tax slabs for FY2024-25, as follows:

Income Range (Rs)

Tax Rate

Up to 3,00,000: Nil

3,00,001 to 7,00,000: 5%

7,00,001 to 10,00,000: 10%

10,00,001 to 12,00,000: 15%

12,00,001 to 15,00,000: 20%

Above 15,00,000: 30%

Benefits for Homebuyers

Arpit Mehrotra, Managing Director of Office Services at Colliers India, commended the measures announced in Budget 2024, particularly those aimed at homebuyers. Here are some highlights:

1. Increased Home Ownership Among Women:
   • Lower stamp duties make purchasing property more affordable for women, potentially leading to a rise in female homeowners.

1. Boost in Real Estate Transactions:
   • The reduction in costs associated with buying property can stimulate more real estate transactions, as women and families take advantage of the savings.

PM-Awas Yojana Urban 2.0

The Budget 2024 introduced the PM-Awas Yojana Urban 2.0, aiming to provide housing for all. Key recommendations include:

1. Focus on Housing for Poor and Middle Class:
   • The government plans to allocate Rs 2.2 lakh crore for urban housing plans under PMAY-U over five years.

1. Interest Subsidy:
   • Interest subsidy under PMAY-U will be provided, making housing more affordable.

1. Lower Stamp Duty for Women Homeowners:
   • States are encouraged to reduce stamp duty for women homeowners, promoting gender equality in property ownership.

House Rent Allowance (HRA) Exemption Expansion

Grant Thornton Bharat highlighted the need to expand the cities eligible for higher HRA exemption:

1. Current HRA Exemption:
   • Presently, income tax provisions allow 50% of basic salary for HRA exemption in four cities (Delhi, Mumbai, Chennai, Kolkata) and 40% for other cities.

1. Expected Expansion:
   • With the development of cities like Bengaluru, Hyderabad, Pune, and Gurgaon, there is an expectation to consider these cities for the higher HRA exemption limit of 50%.

Real Estate Sector Expectations

The real estate sector has several expectations from Budget 2024, aiming to boost housing and economic growth:

1. Interest Subsidy Programs:
   • To make home loans more affordable.

1. Strategic Use of Government Land:
   • Lower project costs by utilizing government land.

1. Tax Incentives:
   • To counter rising raw material and land prices.

1. Revival of the Credit-Linked Subsidy Scheme (CLSS):
   • Enhance affordability and stimulate housing demand.

Long Term Capital Gain (LTCG) Taxation

The Budget introduced changes to LTCG taxation for real estate:

1. Removal of Indexation Benefit:
   • Indexation for property sales has been removed, and the LTCG rate has been fixed at 12.5%.

1. Impact on Property Sellers:
   • This change may impact property sellers and the real estate industry, potentially increasing the tax burden on long-term capital gains from property sales.

Conclusion

Budget 2024 brings significant changes to the income tax regime, offering relief to taxpayers and boosting the real estate sector. With revised tax slabs, increased standard deductions, and enhanced support for homebuyers, the budget aims to stimulate economic growth and provide affordable housing for all. The real estate sector anticipates further reforms and incentives to continue its robust growth and contribute to India's economic development.