India budget targets infrastructure, health and affordable housing

V Nagarajan

The Indian budget for 2021-22 has been presented against the backdrop of Covid-19 curve flattening with vaccine inoculation drive undertaken all over the country.  It has focused on six pillars of the economy viz. health and wellbeing, infrastructure, inclusive growth, human capital, R&D and with the dominant theme of minimum government and maximum governance.  

For non-resident Indians (NRIs), there is relief from taxation in income from retirement benefit account maintained in a notified country.  

Rules will be notified for removing hardships faced by them regarding their foreign retirement accounts.  

Further, Section 10(4E) has been newly inserted to exempt in the hands of non-resident, any income accrued or arisen to, or received by a non-resident as a result of transfer of non-deliverable forward contracts entered into with an offshore banking unit of an IFSC which commenced operations on or before the 31 March 2024 and fulfils prescribed conditions.

In a move to attract foreign investment for infrastructure, infrastructure debt funds have been made eligible to raise funds by issuing zero coupon bonds.  There will be relaxations to some conditions relating to prohibition on private funding, restriction on commercial activities and direct investment.  

On the commercial sector, the announcement to set up seven mega textile parks with plug-and-play facility in three years will enable the government to unlock the potential of new markets for development.  It will provide an impetus to real estate assets, including logistics and warehousing.

As regards housing sector, there will be an additional deduction of interest upto Rs150,000, for loan taken to buy affordable housing till March 2022.  The tax holiday for affordable housing projects has been extended till March 2022.  Further, sub-Section 80-IBA (1A) is proposed to be inserted, whereby 100 percent deduction of the profits can also be availed for the profits and gains derived from the business of developing and building an affordable rental housing project.  

The tax relief for homebuyers and developers buying or selling below the circle rate by upto 20% has also been extended and this will be applicable from assessment year 2021-22.  However, the relief will be available only on properties valued upto Rs20 million bought in the primary market during November 21, 2020 to June 30, 2021.  It is also proposed to amend the proviso to Section 54GB(5) so as to extend the outer date of investment eligible for benefit in case of an eligible start-up, the capital gains arising from transfer of residential property made up to 31 March 2022.

In a related development, the budget 2021 has also proposed to make dividend payment to REIT and InvITs exempt from TDS.   

In a nutshell the budget was broad-based with a thrust on development of infrastructure and affordable housing. The measures will lead to job creation in the informal sector, as it has been severely hit by the Covid-19 pandemic and the resultant impact on the overall economy.    

I have ancestral property bequeathed from my grandparents.  I am planning to execute a Will with the exclusion of some family members.  Are there any restrictions?  Please clarify. Harshit, Sharjah.

Execution of a Will in favour of one legal heir, to the exclusion of another legal heir, does not invalidate the process.  But there may be challenges while probating the Will from the affected parties.  The wording of the Will by your grandparents and parents assumes significance depending on whether they have bequeathed solely to you.  It is advisable to consult a legal expert as the drafting of the Will is crucial.  

I have been receiving rental income from leased properties in Pune and Mumbai.  Does it require declaration to be submitted while leasing or selling the unit for repatriation?  Please advise. Mukul Goel, Dubai.

You can rent out the property without the approval of Reserve Bank of India.  Rent received can be credited to NRO/NRE account or remitted abroad.  Powers have been delegated to the authorised dealers i.e. banks to allow repatriation of current income like rent, dividend, pension, interest, etc.  You may have to produce a certificate by a chartered accountant certifying that the amount proposed to be remitted is eligible for remittance and that applicable taxes have been paid/provided for.