Infrastructure status to boost real estate market
The housing sector is likely to get relief from the pain of demonetisation with the ‘affordability’ steroid. Budget 2017 has proposed infrastructure status for affordable housing, a long-standing demand of developers, and also increased the allocation for the Prime Minister Awas Yojana from Rs 15,000 crore to Rs 23,000 crore, bringing the country closer to realising the Housing for All mission by 2022. However, no specific incentives were announced for first-time buyers.
Calling it a “path-breaking Budget, experts say granting infrastructure status to affordable housing is significant as it will provide cheaper sources of finance to developers and also open up additional avenues for developers to raise funds. The segment will now be given priority lending status.
“We propose to facilitate higher investment in affordable housing. Affordable housing will now be given infrastructure status, which will enable these projects to avail the associated benefits,” finance minister Arun Jaitley said. With surplus liquidity created by demonetisation, he said the banks have already started reducing their lending rates, including those for housing. Interest subvention for housing loans has also been announced by the Prime Minister.
Highlighting affordable housing as a thrust area of tax proposals, he said: “In my budget proposals last year, I had announced a scheme for profit-linked income tax exemption for promoters of affordable housing scheme which has received a very good response.”
To make this scheme more attractive and to ensure homebuyers got value for money, carpet area (excluding public areas such as lifts, corridors) of 30 and 60 sq m would be counted instead of the built-up area.