An ‘Uttam’ Budget For The Real Estate Sector









After last year surgical strike on black money with demonetization, everyone was keenly awaiting for the budget of 2017. This was the first budget which was presented on the first week of February, normally budget was presented on the last week of February. From this year onwards railway budget was merged with the annual financial budget. The real estate contributes approximately 15% to India’s GDP. Even the the prime minister’s office tweeted about the budget - “The Housing sector stands to gain immensely from the Budget”. Prime Minister Narendra Modi said it was a ‘Uttam’ budget to strengthening the hands of the poor.

The biggest cheer in the budget was the reduction of tax rate of individuals earning between Rs 2.5 lakh to Rs 5 lakh to 5% from the current 10%. Many of consumer for the affordable home come under this category. With tax rate cut, now consumers will have a good opportunity to buy their dream home and many banks are now offering loans with low interest rate. Now consumers will have more purchasing power.

Holding period for considering gain from immovable property has been reduced to two years from existing three years now. Under the latest provisions, developers to get one year's time to pay tax on notional rental income on completed unsold residential inventory. In the previous budget Finance Minister had allocated Rs 15000 crores for Pradhan Mantri Awas Yojana (PMAY). In this year’s budget allocation for PMAY has been increased to Rs 23000 crores.

Affordable housing now coming under the ambit of the infrastructure sector, making this segment eligible for various government incentives and attractive for foreign investors. With foreign investor coming to India the standard of infrastructure will now increase.

National Housing Bank will refinance loans worth Rs 20,000 crore in 2017-18. This was possible due to last year surplus liquidity after demonetization. After introducing Real Estate (Regulation and Development) Act (RERA) in 2016 which has led to more transparency in the realty sector. Implementation of policies like Real Estate Regulatory Authority (RERA) Bill has made project promoters to register their projects with the Regulatory Authorities disclosing project information. In this year budget Rs.3,96,135 crore has been allocated for infrastructure, this will boost the real estate.

A sigh of relief for all home buyers as exemption for housing loans interest payments may go up from the current 2 Lakhs to 2.5 lakhs. Instead of built up area, carpet area to now define affordable housing. Now any cash transaction above Rs 3 Lakhs is banned & this is a favorable step towards for more transparency. This year GST will also come into effect, which will bring positive effect on the real estate sector.

Overall this year’s budget will bring more positive transformation to the real estate sector.


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