The much awaited budget 2017-18 is out and along with it, a range of expectations for the future. The Union Budget 2017 is a very cheering and approving budget for real estate industry. It has proposed a number of positive procedures to build up the structure of the Indian real estate sector. The real estate sector contributes approximately 15% of India’s GDP. Without a hesitation, the Indian realty sector deserves attention for its health. It has direct impact India’s economic health.
Some key features of budget are—
- Taxation
- Infrastructure
- Loan refinance
- Pradhan Mantri Awas Yojna (PMAY)
- Increase in the size of housing
Taxation
There is a huge relief in tax.
The tax period for capital gains has been abridged to two years from three years.
This means that smaller capital gain tax will be in the offing for those intend to sell their property after a period of two years of acquisition.
Developers can gain tax break of 1 year after the receipt of completion certificate for the unsold stock.
This means that the person hold the land in a given real estate project will have to pay ‘tax on gains’ once when the entire project is completed and not before that. As the tax payment will be delayed, more land owner will be confident to tie up with developers and realtors. It is the huge push to affordable housing also ensures that the dream of owning a home will soon become a reality for many more. The Budget yet missed out, any extra income tax incentive to first time home buyers and not provides higher tax savings on housing loans and house insurance premiums.
Infrastructure
One of the major developments for the realty sector in this budget is affordable housing receiving infrastructure status. This provides a required boost to the affordable housing segment. Finance Minister Arun Jaitley in his budget speech approved infrastructure status to the affordable housing schemes in the country. This will allow the developers to enjoy the coupled benefits.
The total allotment for infrastructure is an enormous Rs 3,96,135 crores in 2017-18.
This is good news for the real estate sector as the relationship of infrastructure with real estate growth is a well decent fact. Click here to read about Real estate brokerage business in India.
Promoters of affordable housing will now have further time of up to 5 years as beside of 3 years to complete their project.
The budget put a lot of essential accent on grassroots investments in the rural areas. Affordable housing gets infrastructure status would increase the private participation in this segment and also lending to this segment will be a priority lending for banks. This will also allow developers to access funds at lower rates.
Loan refinance
The National Housing Bank (NHB) will refinance Rs. 20,000 crore loans. The NHB refinancing if it comes in the form of subsidy.
This can push home loan rates down. For example, a 50 basis points reduction in a home loan over 20 year tenure on 80 per cent of Rs 1 crore apartment of the purchase price will bring down the effective price by 4.11 per cent.
This would have a positively impressive impact on consumer demand. This will provide the final lost link to renew the real estate sector decisively across segments. A reduction in home loan rates brings down the cost of purchase house making it more affordable.
Pradhan Mantri Awas Yojna (PMAY)
The budget also propose to complete 1 crore houses by 2019 for the houseless and those living in kuccha houses. Click here to read about Top ten real estate investing question.
Allocation to Pradhan Mantri Awaas Yojana Gramin was also raise from Rs 15,000 crores in BE 2016-17 to Rs 23,000 crores in 2017-18.
Increase in the size of housing
Now bigger unit areas qualify for affordable housing, making more units applicable for affordable housing benefits. This move will not only move forward affordable housing in tier 2 and 3 cities but the sector would also attract better investments.
For affordable housing, the carpet area of 30 and 60 sq meters will be applicable in its place of built-up area of 30 and 60 sq meters.
The 30 sq meters limit will apply in case of municipal limits of 4 metropolitan cities and for rest of the country; limit of 60 sq meters will apply. This move will make houses more spacious.
Kindly give your feedback in comment box
And
For more information call: – 9529331331