The interim Budget this year was a big bonanza for the real estate sector of the country. The real estate sector was suffering from initial glitches due to the implementation of RERA, demonetization, and GST. However, the sector picked up in the last quarter and is expected to grow further after the various initiatives announced by Finance Minister Piyush Goyal. “The Budget is a dream come true for real estate. Above all, freeing incomes up to Rs 5 lakh from income tax which potentially means exemptions on incomes of Rs 6.5 lakh or more, increases the purchasing power and the power to invest in the hands of the consumer capable of flowing into housing,” said Jaxay Shah, the President of realtors’ apex body CREDAI.
The two major announcements in this Budget which will give a boost to the real estate sector are income tax exemption on notional rent for occupying second house and exempting second homes investment from capital gains. “Increasing the TDS threshold to Rs 2.4 lakh and allowing two years exemption from notional rent on unsold inventory remove major irritants. Section 80IBA extension by one year is a boost to affordable housing,” added Shah.
In a boost to ‘Housing for All’ scheme, Modi government has granted 1 lakh crore rupees for affordable housing. The government has also granted infrastructure status to affordable housing to help the developers. “With nearly 4 lakh homes sanctioned at the 42nd CSMC today, the total number of homes sanctioned under this flagship mission with the vision of providing a home to every Indian has crossed 72.5 lakhs,” tweeted Union Housing and Urban Affairs Secretary Durga Shanker Mishra. The scheme was launched in 2015 by PM Modi with the aim to build 1 crore houses by 2022, of this fund for 72.5 lakh homes has been already sanctioned.
Credit Link Subsidy Scheme (CLSS) on home loans for the Middle Income Group (MIG) under which the government gives a subsidy of 2.67 lakh rupees has been extended. The scheme will benefit middle-income groups with an annual income of 6 lakh rupees to 12 lakh rupees will get interest subsidy on 20-year loan component of 9 lakh rupees. Households with income of 12 lakh rupees to 18 lakh rupees will get interest subsidy of 3 percent.
Anshuman Magazine, Chairman & CEO, India, South East Asia, Middle East & Africa, CBRE argued that the interim Budget announcements will propel the growth of residential real estate in the country. “The new policy for no tax on notional rent on the second house, and the tax waiver announced for rental income up to Rs 2.4 lakh per annum will accelerate the recovery in the real estate sector,” Magazine said.
The tax cut by the government will improve the demand in the affordable housing sector and will also help in clearing the glut in the sector. The low prices in this sector will help the middle class and economically weaker section of the society to purchase flats. Modi government will be able to reap electoral dividends through growth in affordable housing.