The real estate sector
is the second largest employer contributing to our economy after agriculture. The Union Budget
2017-16 has given it a much needed thrust and is promising for both home buyers and developers. The budget has made way for affordable housing and funding for residential developments.
Here are some game changing highlights from the budget that are set to boost realty:
1. Affordable Housing has been given the Infrastructure status:
With the change of status of ‘affordable housing’ to ‘infrastructure’, these projects are eligible to avail the associated benefits. The change of status will enable developers to obtain loans at cheaper rates. This will in turn reduce the prices of homes lifting a burden off the shoulders of home buyers.
2. National Housing Bank to refinance Rs 20,000 crore loans:
With the Union Budget 2017-18, the National Housing Bank will refinance individual housing loans of about Rs 20,000 crore. Previously unapproved projects will get a green signal through this move. Thanks to the surplus liquidity created by demonetisation, the banks have already started reducing their lending rates, including those for housing.
3. Pradhan Mantri Awas Yojana to get Rs 23,000 crore:
Under the Pradhan Mantri Awas Yojana 2016 (PMAY), the citizens of rural India got 10 lakh new homes. Now with an increased allocation of Rs 23,000 crore, the target number of 44 lakh homes is expected to be completed before the year end. This move will help rural citizens achieve their lifelong dream of living in a better home.
4. Real estate developers to get tax relief on unsold stock
as liability to pay capital gains will arise only in the year a project is completed. Capital gains on projects only for the launch year, tax exemption on unsold inventory and the reduction of LTCG tax period will help developers holding real estate stock. This comes in as a relief especially with the sudden drop in sales after the demonetisation drive.
5. Instead of built up area of 30 and 60 sq meters, the carpet area of 30 and 60 sq meters
will be applicable for affordable housing
With this new move, taxes applicable on the bigger built-up area are set to reduce. Instead, home owners will be taxed on their carpet area, meaning taxes are levied only on the actual space occupied leaving out the common areas of a building.
6. No cash transaction above Rs 3 lakh will be allowed:
Following the RERA Act for transparent transaction in real estate, the Union Budget 2017-18 does not allow cash transactions above Rs 3 Lakh. This will lead to more honest transactions and leaves no place for black money or hidden costs, improving the financial status of the country on the whole.
7. Digitisation of land records:
Through the Digital India Land Records Modernisation Programme, there will be a clear record of government, forest and most importantly private land holdings that will avoid numerous disputes and help any third party to get direct and accurate access to information regarding the same.
The author, Gunjan Goel is Director, Goel Ganga Developments