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 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.
Jaitley also announced that National Housing Bank will refinance individual loans worth Rs 20,000 crore in 2017-18. “NHB allocation will give a big push to affordable Housing Finance companies namely AU housing, Gruh Finance, Repco,” said India Ratings.
On the all-important front of personal income tax, the existing tax rate for incomes between Rs. 2.5 lakh to 5 lakhs 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 2016-17:
- 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-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 Awas 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
Giving affordable housing an infrastructure status, the Finance Minister gave aam aadmi enough reason to cheer. He said to give a boost to housing, banks have started reducing lending rates after demonetisation.