Tax relief on builder-paid rent in redevelopment projects

Image Credit: The Times of India

The Indian government has provided tax relief for builders paying rent to tenants during redevelopment projects. Under the new rules, builders can claim a deduction for the entire amount paid as rent, rather than the previous limit of 30% of the rental income.

The tax relief applies to builders who are redeveloping buildings that are more than 30 years old and are paying rent to tenants who have been displaced during the redevelopment. The deduction can be claimed for up to two years, starting from the financial year in which the builder starts paying rent to the tenants.

The new rules aim to encourage builders to take on redevelopment projects and provide relief to tenants who may have been displaced during the process. The government hopes that this will help to unlock the potential of India’s real estate sector and boost economic growth.

However, some experts have raised concerns about the effectiveness of the new rules. They argue that the tax relief may not be enough to incentivize builders to take on redevelopment projects, as the process can be time-consuming and complex. Additionally, they suggest that the government should focus on simplifying the regulatory framework and addressing other challenges in the real estate sector, such as high land prices and a lack of financing options.

RE-reported from the story originally published in The Times of India