BENGALURU | MUMBAI | NEW DELHI: Finance Minister Arun Jaitley in his Budget 2017-18 speech has given one of the much needed thrust to the Indian real estate sector. The minister announced that the ‘Affordable Housing’ will be given ‘Infrastructure’ status, which is likely to result in increased participation from private players.
“The announcement of affordable housing being given Infrastructure status is a welcome move and will act as a catalyst to meet the objectives of Housing to ..
“The announcement of affordable housing being given Infrastructure status is a welcome move and will act as a catalyst to meet the objectives of Housing to all by 2022. Credit off-take towards affordable segment of housing will lead to creation of supply especially for both stake holders the first home buyer and developer who will now have access to cheaper funding,” said Ravi Ahuja, Executive Director, Office Services & Investment Sales at Colliers International India.
On the all-important front of personal income tax, the existing tax rate for incomes between Rs. 2.5 lakh to 5 lakh has been reduced to 5%, and taxpayers in other categories will also save Rs. 12,500.
Key highlights for real estate sector in Union Budget 2017:
* Affordable Housing has been given the Infrastructure status
* 1 crore rural houses will be created by 2019
* National Housing Bank to refinance Rs 20,000 crore loans
* Pradhan Mantri Awas Yojana to get Rs 23,000 crore
* 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
* Instead of Built up area of 30 and 60 sq meters, the carpet area of 30 and 60 sq meters will be applicable for affordable housing
* Holding period for capital gains tax for immovable property reduced from 3 years to 2 years
* Window for availing 3 ye ..
* Window for availing 3 year profit-linked incentives for start ups increased to 7 years against 5 years earlier
* Tax break of 1 year post receipt of the completion certificate, for the unsold stock
* New FDI policy under consideration
* No cash transaction above Rs 3 lakh will be allowed
* Rs 2.41 lakh crore has been allocated to boosting infrastructure for transportation
* Indra Awaas Yojana will be extended to 600 districts
* Total allocation for the infrastructure sector is Rs 3,96,135 crore
* Allocation for National Highways to be at Rs 64,000 crore
* No cash transactions above 3 lakh
* Indexation for capital gains shifted from 01-04-81 to 01-04-2001
Here is how the industry player reacted to the announcement made in Union Budget 2017-18:
Joe Verghese, Managing Director, Colliers In ..
Subsequent announcements on increasing the qualifying unit area and the time frame for completion to 5 years are two great steps, acknowledging the practical and operational aspects. Area was too low to be called a decent unit and 3 years was almost impractical for completion of the project considering there is no separate approval process for affordable housing and one had no certainty of time taken just for approvals!
Milind Kothari. Managing Partner & Head of Direct Tax, BDO India
The move to provide clarity for taxation of Joint Development Agreement to the date of completion of project would provide a great fillip to unlocking land for development and reduce litigation.
Nidhi Seksaria, Advisory Partner & Leader – Real Estate, BDO India LLP
With industry status, banks will be willing to lend more to projects in the affordable housing segment and thus larger acc ..
Taxation of Capital Gains of Joint Development Agreement: The budget proposes to change the prevalent practice and has clarified that the landowner entering into a joint development agreement for development of the property, shall be subject to capital gains tax upon completion of the project. This is a significant change, which is much needed, to bring clarity on the aspect and avoid litigation with the department, which was invariably a norm given the current ambiguity.