The budget has been published with much furore and the real estate sector had many wishes and the finance minister also tried to help the sector which is evident in the budget proposals say the experts. Overall the budget seems to have been growth oriented and progressive. The reasons are many along with the striking factor that the budget points out is that the spending is proposed to be hiked by a startling 23 percent. This certainly indicates that it is proposed to usher in many activities and investments in the sector. Along with the way the government was going in boosting the housing sector especially the affordable housing sector and the measures like the REIT and the mobilization of funds this budget seems to have been an extension in these efforts. The experts and the trend watchers opine that this budget has been geared for the common good and the good of the greater sections of the public in general. Here we try to uphold the salient parts of the budget that goes to make the nation’s real estate more robust.
The proposal like the deduction of tax on profits from a housing project for apartments constructed up to 30 sq. meters in the four A-1 cities and a deduction of up to 60 sq. metres in other cities of India are welcome by the sector. This will be applicable for the projects approved between June 2016 and March 2019 but if they are completed within a period of three years. This measure will certainly boost the supply in the affordable sector though the developers will be subject to alternate taxes at the minimum.
The other advantage that the experts speak of is the distribution made out of the proceeds and the income generated of the Special Purpose Vehicles and the subsidiary companies of the Real Estate Investment Trusts (REITs) and also the Infrastructure Investment Trusts (INvITs) which has a specific shareholding would not be subjected to the Dividend Distribution Tax for the distribution of the dividends after a specified date. The experts opine that this is certainly a very progressive step to boost the growth of the REITs which would also help in pumping fresh capital to the sector.
Another benefit given to the mid sector buyer is the proposal of deduction of an additional interest of Rs. 50, 000 annually for loans of up to Rs. 35 lakhs for the first time home buyers. The loans must have been sanctioned in 2016-2017 where the cost of the house purchased does not exceed Rs. 50 lakhs.
This measure the experts opine will directly boost the home buyer’s sentiments. Another good news for the real estate sector is the exemption of service tax on the construction of affordable housing and apartments within a limit of 60 sq. metres under any of the schemes of the state or the central government including the schemes of Private Public Partnership (PPP) model which is also welcome by the experts and said the measure is in the right direction.
Another aspect of the measures taken on the rental segment is also one that is beneficial for the general public. The tax exemption for the rent paid has been increased from Rs. 24, 000 to Rs. 60, 000 which will help a lot for the rental segment. The trend watchers remark that this proposal will take into account the increments of rising rental prices in the cities due to high demand of quality housing.
There has been few good news for the ancillary industries related to real estate like the materials used for construction. In this regard the exemption of excise duty made available to the concrete mix industry being manufactured at the sites of constructions is a move that is also welcome by the government. Another proposal that was applauded by many which we mention lastly but definitely not the last is the digitization of the land records which is a much awaited step in the way of lessening the land disputes. The experts feel that these proposals go well with the direction that real estate has been geared to take and this will certainly render the sector to yield more and contribute more in the GDP of the country.