India should wait for more time to seek resolution of realty issues

V Nagarajan

With 262 ancillary units depending on realty sector for survival and putting millions of jobs at peril, the Union Budget has done little to rescue the sector from the prolonged downturn.

India’s realty sector will have to wait for more time to seek resolution of various problems plaguing the sector. All that the recent Union Budget could offer is an incentive for affordable housing by extending the window by one year to March 2021 for developers to avail 100 per cent exemption on income from affordable housing projects.

Incremental interest deduction of Rs150,000 for affordable housing loans has been extended for loans taken up to March 31, 2021. The deviation between circle rate and transacted rate for real estate (in case where transacted rate is lower) has been enhanced from 5 per cent to 10 per cent.

 Extension under section 80-IBA Finance Bill has proposed to extend the time limit for approval of affordable housing project for availing deduction under section 80-IBA. The period of approval of the project by the competent authority is proposed to be extended to 31-03-2021. Earlier, the project was required to be approved by the competent authority during the period from 01-06-2016 to 31-03-2020. Extension of time limit for sanctioning of loan under Section 80EEA Section 80EEA was introduced vide Finance (No. 2) Act 2019 to provide a deduction for the interest on loan taken to buy an affordable residential house property. One of the conditions to claim this deduction is that loan should be sanctioned by the financial institution during the period from 01-04-2019 to 31-03-2020. The period of sanctioning of loan by the financial institution is proposed to be extended to 31-03-2021.

According to international property consultant, CBRE, the extension of tax benefits for affordable housing for developers and home buyers by one year is a step in the right direction; as is the focus on the partial guarantee scheme for NBFCs.

The focus on the warehousing sector, including the DC segment, would go a long way in formalising a largely unorganised sector, thereby piquing investor interest. However, the budget did not touch upon critical demands of the sector such as reduced lending costs, stemming the liquidity gap, grant of infrastructure status, single-window clearance, SEZ sunset clause, and reduced GST rates on construction materials.

I am planning to sell two commercial properties in Mumbai and reinvest the sale proceeds in one luxury home. Will I get capital gains exemption for investment? Please clarify. Sanjay Gupta, Sharjah.

Capital gains exemption under section 54F is available if investment is made from the sale of any long-term capital asset. This has to be made within two years from the date of sale or within three years from the date of sale in case of construction. Assuming you are complying with other conditions, you are entitled to claim long-term capital gains exemption under section 54.

I am planning to lease my villa in Bengaluru by entering into a lease agreement with the tenant. Is registration of a lease deed compulsory in India? Subhashri, Dubai.

 The Transfer of Property Act makes a clear distinction between a lease requiring registration and those not requiring registration. However, a lease of immovable property from year to year or for any term exceeding one year or reserving a yearly rent has to be made by a registered document. At the same time, a lease for duration of less than one year, if not accompanied by delivery of possession, does not require to be registered. Though registration of a lease for a term not exceeding one year is optional, it is always in the interest of the parties to get it registered. Non-registration of a compulsorily registrable has several consequences.

I am retaining a flat belonging to my family in a settlement deed finalised one year ago. Should I involve other members while registering it? Can I go ahead alone? Will it pose any legal problem at a later date? Oscar, Ajman.

 There is no need for your family members joining the sale deed to be executed by you which you have got by way of a family settlement deed if it was from your father or mother. If, however, it had come to you by way of or under a partition deed then we need to examine whether there is any ancestral nucleus involved, in which case alone your children may have to join you while selling the flat.