Budget 2017: Expectations vs actual announcements for real estate

The real estate fraternity and home buyers, have now started analysing the fine print of the announcements made in the Union Budget 2017-18. This budget has drawn a clear distinction, between the affordable housing segment and other segments.
Several incentives have been announced for the low-income group (LIG) and affordable segments, through direct announcements, as well as indirect benefits. The middle-income group (MIG) and luxury housing, were largely ignored in Budget 2017, except for a few jolts.
Although the gap between expectations and announcement is wide, it is still hoped that the budget will propel growth in the realty sector.
Anuj Puri, chairman and country head, JLL India says, “In the budget, we had hoped for:
Clarity on the beneficiaries under the Pradhan Mantri Awas Yojana (PMAY). Bigger income tax incentives for first-time home buyers. Higher tax savings on housing loan and house insurance premiums. Clarity on the Goods and Services Tax (GST). Easing of tax reporting and tax slabs. Increase in the house rent deduction limit. While it may not have delivered on all fronts for real estate, the budget has certainly given a leg-up to the common man and affordable housing is certain to see a significant boost, going forward.”
See also: Budget 2017 analysis: Experts believe middle-class home buyers have been ignored
Pre-budget expectation and what the finance minister announced While some of the realty sector’s demands were met wholeheartedly, some were partially addressed and may more were ignored.
Pre-budget expectations Status after Budget 2017 Clarity on key legislations and easing of REIT guidelines. Not mentioned. Urban infrastructure schemes. Rs 3.96 lakh crores for infrastructure.
However, more emphasis on rural infrastructure, as compared to urban infrastructure requirements. Pradhan Mantri Awas Yojana (PMAY); Affordable housing; Easing of home loan rates. Several announcements to promote PMAY, with an allocation of Rs 23,000 crores, along with measures to boost affordable housing.
No relief on home loans for MIG buyers. Greater tax exemption for interest paid on housing loans. Curbed tax benefit on interest paid for properties that are rented out.
Loss from rented property to set off from ‘other heads of income’ capped at Rs 2 lakhs. Imparting industry status to the realty sector. Partially accepted – infrastructure status granted to the affordable housing segment. Affordable housing segment should be completely exempt from the service tax. Demand not considered. Single-window clearances for ease of doing business. Demand not considered. Hike in HRA exemption limit. Demand not considered. Skill and training support to the realty sector; Incentives to organisations involved in skill development Allocation of Rs 4,000 crores for skill acquisition and knowledge awareness for livelihood promotion programme (SANKALP). It will provide training to 3.5 crores youth. Long-term capital gains tax tenure should be reduced to 2 years. Demand fulfilled. Positive announcements for real estate in Budget 2017 According to Sushil Raheja, CEO of Raheja Homes Builders & Developers, the increase in project completion timelines for affordable residential projects, from three years to five years, will give developers more time to sell their inventory. “The government’s qualifying size requirements for affordable housing, has also changed, from a built-up area of 30/60 sq metres to carpet area of 30/60 sq metres. This new change will be worthwhile for builders and attractive to the buyers. Another welcome move, is the reduction of the existing tax rate for income between Rs 2.5 lakhs to Rs 5 lakhs, by 5%. This will boost the demand for affordable houses. The tax relief given to developers on unsold stock, is also going to benefit developers. These are all welcome moves, towards achieving the objective of ‘Housing for All by 2022’,” he concludes.
By: Housing.com/news