Bengaluru, March 02, 2016: The Union Budget 2016-17 highly focused on development of rural and social sectors, infrastructure and recapitalization of bank. For the real estate sector the budget 2016 hardly has any direct benefits.
On one hand where the budget focuses on rural and BPL population, on the other hand it completely ignores the common man who are the main tax payers in the country. Restructuring of tax incentives given for home loan to suit todays realty pricing, making home insurance mandatory, roadmap for implementation of the GST would have been some of the positive moves and were sorely missed in the budget.
One of the positive announcements is the scrapping of the dividend distribution tax (DDT) on Real Estate Investment Trusts (REITs) which was considered as one of the biggest hurdles for REITs in India. Developers and other asset holders are now expected to soon announce the first REIT listing in India which would help revive the realty sector in India.
Even though an additional tax exemption has been granted for the first time home buyers and affordable housing, it would not help boost the housing sector in India. In most of the metros and tier 2 cities real estate prices are high and the INR 50 Lakhs property value bracket for tax exemption is insufficient. End result would be that home buyers would end up buying properties in outskirt areas and would continue to live on rent in city areas. There is a need to develop public transport and infrastructure in suburban areas to encourage more people to reside in city suburbs where property prices are comparatively affordable.
The withdrawal of up to 40% from National Pension System to be tax exempted would improve the buying power of individuals. This would help buyers meet the down payment for their homes, but won’t have a significant impact on the industry.
Growth of Infrastructure has always attracted housing and commercial developments in India. Total outlay for infrastructure for 2016-17 is INR 221246 crores making it one of the main focuses for the year. The new credit rating system for infrastructure projects would help expedite many stalled projects. Upgradation of state highways to national highways, allocation of INR 97,000 crore to road sector including PMGSY – are just some of the inclusions which will help growth of infrastructure and thereby the realty industry in the country.
Corporate Comm India (CCI Newswire)
