Union Budget 2014 will have a positive impact on the Real Estate sector
The Union Budget got announced today and Makaan.com is happy to share its impact on the Real Estate sector. After 2-3 years of unfulfilled expectations, this year’s budget has brought some cheers to the sector and home buyers in India. There are some short term and long term measures that would kick-start the much needed revival of the sector.
Here are some highlights-
1. 100 smart cities: Arun Jaitley has announced an allocation of over 7000 cr for the development of 100 smart cities. This announcement is significant as it will fuel the development activity in the country and real estate will be the prime beneficiary of this move. In the coming years one can expect higher allocation for this dream project of the NDA government. It will also boost the infrastructure and other associated sectors of the economy.
2. NHAI to target 8000 km of road: Road development which is so crucial for the overall development will get a major boost by this announcement. Better road connectivity between the cities will lead to more development and time saving. People will not hesitate to make investment if they are able to cover a distance of 100-150 kms in a matter of few hours. This will lead to development of satellite towns around all major cities in India.
3. Incentive for low cost housing: This is the 1st time that a government has announced something concrete with respect to “affordable housing” in the country. In the past, there was lot of talk around this buzz word but the concept lacked backing. A 400 Cr allocation, although small will set a trend for future investment in this crucial aspect of housing.
4. Increase in the income tax exemption on repayment of interest on home loan from 1.5 lac to 2.0 lac: This will be a good incentive for home buyers as that will be able to avail an additional benefit of 50,000/- on interest payment on home loan. The previous exemption of 1.5 lac, which was announce over a decade back, had lost its purpose as it did not keep pace with the growth in property prices. This move, although very small compared with the expectation, has brought some smile to the home buyers who are burdened with the high cost of property and interest rates.
5. Increase in the IT exemption from 2.0 lac to 2.5 lac: This is a sentimental move that will benefit the salaried class by a small amount of 5000/- per person. It may not have a major impact on the spending habits of individuals but will surely become a discussion point and a feel good factor.
Overall the real estate industry would be happy with the budget announcements. It has started a long term positive trend for the sector.