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The Finance Minister Arun Jaitley, with a keen eye on the 2019 elections, unveiled the 2018 budget in the Lok Sabha. The budget focused on agriculture and farmers, and the challenging fiscal situation. It managed to give a much-needed boost required to empower the women of India. There was also an increase in the cost of mobile phones and televisions, due to a rise in the customs duty from 15% to 20%.

For the real estate sector, the budget is a balanced one, with the majority of focus being on affordable housing. The government’s initiative with respect to the affordable housing fund in the National Housing Bank has been lauded. However, the Union Budget of 2018 will not have a direct impact on the real estate sector. According to experts, this is because the expectations of concessional GST for the real estate sector were not met. This is especially true for real estate builders in Bangalore.

The 2018 budget has also proposed a tax relief for buyers as well as sellers of property, by allowing it to be valued at upto 5% beneath circle rates for the computation of capital gains tax and stamp duty. However, the Finance Minister did specify that any transactions made in respect to immovable property are not applicable where the circle rate value does not exceed 5% of the consideration.

In big cities, the circle rates were considerably higher than the market rates. The discrepancy between the two rates led to an extra source of income for the buyer and the seller. By allowing a 5% gap between the circle rates and the market rates, the irritant can be eliminated. This will allow the secondary market transactions to be revived. Buying or selling an apartment in Bangalore will become easier.

The stamp duty levied by the state government on the transaction rate is based on the circle rate. The circle rate is the least amount of value at which a plot, built-up house, apartment, or a commercial property can be sold or transferred. To put it simply, it is the price at which the buyer pays stamp duty to the government while registering the property.

Recently, the actual sales have been happening much below the circle rate fixed by the government, and the prices have been declining. The sale of an immovable property may be below the circle rate, but the stamp duty is still levied on the circle rate. The 5% gap will help solve this issue.

These amendments will come into effect from the 1st of April, 2019 and will apply in relation to the assessment year 2019-20 as well as the subsequent assessment years. The goal of housing-for-all is still on track as the government is planning to build one crore houses under PMAY (Pradhan Mantri Awas Yojana). All in all, the realty buyers and sellers are set to benefit from this year’s budget, even though there is no direct impact on the real estate market. Therefore, don’t hesitate to buy an apartment in Bangalore this year!

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