By Ramesh Nair, CEO & Country Head, JLL
The Finance Minister has announced no additional tax liability in the hands of both buyers and sellers where the differential in the actual transaction value of the property and circle rate is upto 20%. This will be effective immediately upto June 30th 2021 and applicable for residential sales in the primary segment for ticket size up to INR 2 crore. This comes as a significant benefit for both buyers and sellers as it will reduce and rationalise tax outgo to a great extent. Developers will now have the incentive in the form of this revised tax provision to pass on the benefit of lower market prices to buyers without incurring additional tax liability under the erstwhile provisions.
This announcement is timely given the following developments in the real estate sector:
- Property values in a majority of India’s prime residential markets have largely remained stagnant in the past few years. Select developers in certain markets are providing price discounts to genuine homebuyers thereby leading to further rationalisation of prices. This is despite the fact that most of the developers are already operating on thin margins and have limited scope for price reduction.
- As of September end 2020, developers had a locked in capital of nearly INR 3.7 trillion with unsold inventory to the tune of more than 450,000 units at various stages of construction across the top 7 cities.
- This announcement will help in accelerating the pace of sales for developers especially in the affordable and mid-priced segments
Corporate Comm India (CCI Newswire)
