Budget boosts affordable housing
The much awaited Union Budget 2017-18 has been finally announced and has scored high in terms of impressing the countrymen, with the realty sector making the most out of it. The New Year Eve of 2017 saw incentives announced for the affordable housing segment which was followed by the banks declaring lending rate reductions very next day. Teasers about positive changes in the personal income tax structure were making rounds well ahead of the Budget day too.
By granting infrastructure status to the affordable housing segment, reducing the tax rate for the initial slab and big plans laid for the infrastructural development of the country, this Union Budget has expressed its road ahead for the realty sector of the country which will now bet big in near future. As predicted, a common man’s Budget has been presented and this is expected to bring about a transformation in the economy.
The developers as well as the other sectors have also hailed the budget. “Affordable housing being given Infrastructure status is a welcome move and will help for Housing to all by 2022. Special funds under Pradhanmatri Awas Yojna and NHB will bring huge opportunity for a large no of home buyers. Govt. focus for developing road infrastructure, manufacturing and affordable housing will not only help to decongest urban area but also help to development of new industrial cities around our industrial transport corridors. Affordable housing area criteria based on carpet area instead of build-up area will give benefit to more buyers. 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,” said Pawan Jasuja- Director, Find My Property.
Rajesh Goyal, Vice President CREDAI-Western U.P. & MD, RG Group said that as anticipated, a populous budget has been announced by the government which will allow the young generation to save more and invest further. This budget saw the government offering several benefits to the realty sector, at the same time missing out on a few important decisions. Single window clearance system is still not implemented across the country which is hampering the delivery schedule of the developers. Amongst the major hits, the criteria for affordable housing has been changed from built up area to carpet area basis. This will allow affordable housing segment to look more lucrative for both, developers and buyers. With the income tax rebate for the first slab and affordable housing incentives in place, we will now observe the youth of the country looking out at realty sector as an avenue for investment or residing.
Aji Nair – Chief Operating Officer, F&B Division, Mirah Hospitality said that the announcement of setting up 5 special tourism zones will also attract more traffic. “These special tourism zones would be created as Special Purpose Vehicle (SPVs) in connection with the state government which again is a positive move for the industry and indicates a high potential of increase in job opportunities. Extending tax holidays for start-ups up to 3 years of the first seven years will attract more entrepreneurs to the hospitality sector. Overall, the budget would bring back the lost sheen to the segment”, he added
Key Hits from the Budget:
- Infrastructure Status accorded to Affordable Housing also redefining the unit sizes of 30 sq. mtr. and 60 sq. mtr. from built up area to carpet area. Projects in the direct municipalities of the four metropolitans to be considered for 30 sq. mtr. capping, rest all regions to have the capping at 60 sq. mtr. for affordable housing.
- Affordable housing projects to be awarded a completion time of 5 years from launch as against the previous tenure of 3 years.
- Developers to get one year’s time to pay tax on notional rental income on completed unsold residential inventory.
- Tax benefits to the middle income group providing tax rate cuts of 5% for people in the income slab of INR 2,50,000 to INR 5,00,000. Additional reduction of INR 2,500 for people earning INR 3,00,000 annually making their total tax component zero. Reduction of INR 12,500 allowed on the final tax figures of remaining slabs.
- Income Tax rate for MSMEs with turnover upto INR 50 crores reduced to 25% from the earlier rate of 30%.
- Pradham Mantri Gram Awas Yojna to build 1 crore houses by 2019. INR 23,000 crores allocated for this financial year compared to INR 15,000 crores in the last financial year.
- Pradhan Mantri Gram Sadak Yojna allocated funds of INR 19,000 crores which will cumulatively amount to INR 27,000 crores with the contribution from states.
- INR 64,000 crores allocated for Highways against last year’s INR 57,676 crores. This would also include 2,000 Kms of coastal connectivity which have been identified.
- A total of INR 3,96,135 crores have been allocated towards infrastructure development which is the highest in history.
- Airports in smaller towns to come up on PPP model.
- FDI norms to be further liberalised and online application to be enabled for FDI. FIPB to be abolished.