What Budget 2016 had in store for the realty sector
Union Budget 2016 was been filed in the lower house of the parliament amidst great expectations from industry leaders and the common man. Finance Minister Arun Jaitley delivered a budget which catered to the farmers and poorer sections of the society. Small tax payers were also given some relief.
The minister began presenting the budget by stating that there were nine pillars on which his budget stood. From the real estate perspective the pillars which would have the most direct impact on this sector would be infrastructure and tax reforms.
Over all Union Budget 2016 seems to be a mixed bag for the realty industry. While some expectations were addressed, some went totally ignored. A demand which has been met is the digitization of land records which will lead to dispute free titles. Under the Digital India Initiative, the National Land Record Modernisation Programme is set to be revamped and this scheme will come into effect from April 1st, 2016. This will bring the much needed transparency to the realty sector.
Here is a detailed look at what the budget had in store for the realty sector.
Infrastructure: Infrastructure was given a major thrust through this budget. Special attention was given to road related infrastructure. This spells good news for the realty sector as the growth of this industry depends on the presence of quality transport related infrastructure.
Here are some of the key infrastructure related announcements from Budget 2016:85% of road projects which were languishing are back on track INR 97,000 crores has been set aside for road sector 10,000 km of National Highways to come up in 2017 50,000 km of State Highways to be converted to National Highways Total outlay of INR 2.18 lakh crores for rail and road Total outlay of INR 2.21 crores for infrastructure 160 airports and airstrips to be revived
Tax reforms: One of the biggest disappointments here is that the tax slab has been left untouched. But small tax payers have been granted an increase in rebate. Some good news for the real estate sector was also on the cards in terms of REITs, affordable housing and the rental segment.
Here are some of the important tax reforms from Budget 2016Those who earn below INR 5 lakhs will see an increase in rebate from INR 2000 to INR 5000 HRA deduction goes up to INR 60,000 from INR 24,000 First time home buyers to enjoy deduction on an additional interest of INR 50,000 on home loans up to INR 35 lakhs if the value of the house does not go beyond INR 50 lakhs 100% deduction for profits to an undertaking from a housing project for flats upto 30 sq. metres in four metro cities and 60 sq. metres in other cities, approved during June 2016 to March 2019 Service tax exempted on affordable homes which measure less than 60 sq. m Dividend Distribution Tax on Real Estate Investment Trusts (REITs) has been removed Withdrawal of up to 40% from National Pension System to be tax exempted 100% deduction of profits for 3 out of 5 years for startups set up during April 2016 to March 2019
Kavitha Ravi for IndiaProperty.com
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