Union Budget 2019-20: Three Main Announcements That Directly Affect Home Buyers

Union Budget 2019-20
Union Budget 2019-20

Union Budget 2019-20 has evoked mixed reactions from the real estate sector with a few hits and several misses. While the efforts like the push for affordable housing and infrastructure, along with the promotion of rental housing, are being lauded, developers and other stakeholders are miffed that the budget failed to address their demand of granting long-standing industry status for the sector, single-window clearance and reforms in the Goods and Services Tax (GST).

Although Union Budget 2019-20 did not offer much for the real estate sector as a whole, there has been some important announcements for the homebuyers. Let us have a look at the three main offerings of budget that could affect home buyers:

  •  Additional Tax Benefit

While presenting the her maiden budget, Finance Minister Nirmala Sitharaman raised the tax deduction limit to Rs 3.5 lakh on the interest paid on home loans sanctioned during this financial year for the purchase of the first home worth up to Rs 45 lakh.

Clauses:

·       The benefit will be available if the home loan is sanctioned between April 1, 2019 and March 31, 2020.

·       The borrower should not own any house, on the date of sanction of the home loan.

·       The benefit is available, only if the stamp duty value of the property does not exceed the amount of Rs 45 lakhs.

  •  Regulations Shifting From NHB To RBI:

Until now, there was no uniformity in the lending policies of home loans as some loans are granted by banks which come under RBI while some are granted by housing finance companies (HFCs) that are governed by the National Housing Bank.

The minister announced in the budget that regulation rights of housing finance companies will now be transferred to RBI.

The move will ensure that the methodology for computing the benchmark lending rate, as well as various charges like prepayment penalties to become uniform. The move is also expected to ensure that the eligibility criteria, as well as margin requirement for home loans, become uniform. This will not only benefit and help the borrowers, but it will also increase competition amongst the lenders.

  • Refinement Of TDS:

To widen the tax net and reduce litigations, Section 194IA has been amended, to include all charges like garage, electricity charges, maintenance charges, club membership fees, while arriving at the threshold of Rs. 50 lakhs.

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