#Budget2017: How Jaitley Turned India’s Real Estate More Attractive For Investors
Despite being termed a damp squib by Congress Vice-President Rahul Gandhi, Finance Minister Arun Jaitley’s Budget received applause from the markets. With the progress of the FM’s Speech, both the Sensex and the Nifty moved upwards and registered gains of around one per cent by the end of the day. After all, measures announced in the Union Budget 2017-18 seek to continue the growth momentum that has received global recognition.
Jaitley did not forget to list them in his Budget Speech.
“A number of global reports and assessments, over the last two years, have shown that India has considerably improved its policies, practices and economic profile. These are reflected in (the) Doing Business Report of the World Bank; (the) World Investment Report 2016 of UNCTAD; (the) Global Competitiveness Report of 2015-16 and 2016-17 of the World Economic Forum; and several other reports. India has become the sixth-largest manufacturing country in the world, up from ninth previously. We are seen as an engine of global growth,” Jaitley said.
Amid speculations that investors’ interest in India’s real estate is likely to gain momentum in future, Jaitley has announced some measures that will send the right signals.
Here is how Jaitley just made India’s real estate sector more lucrative for investors:
- The absence of an industry tag had led to real estate investments getting stuck midway. For investors, this would not be a concern anymore. “We propose to facilitate higher investment in affordable housing. Affordable housing will now be given infrastructure status, which will enable these projects to avail (of) the associated benefits, “ the FM said in his speech. According to experts, an industry status will ensure financial institutions’ willingness to lend more to projects in the affordable housing segment would increase.
- The promoters of affordable housing will get better tax sops now. Instead of a "built-up area" of 30 and 60 square metres, the carpet area of 30 and 60 sq mt will be counted as an affordable unit. The 30 sq mt limit will apply only to four metropolitan cities while for the rest of the country, including in the peripheral areas of metros, the limit is 60 sq mt. Earlier, developers had to complete the projects within three years to avail of tax benefits; the FM has now increased this period to five years. This is seen as a positive move by the industry.
- The FM also announced that for joint development agreement signed for the development of a property, the liability to pay capital gains tax will arise in the year the project is completed.
- As it has "successfully implemented e-filing and online processing of FDI applications and now reached a stage where it can be phased out, the Foreign Investment Promotion Board (FIPB) will cease to exist soon. To safeguard investors’ interests, a Bill will soon be formulated, the FM added.
- The government plans to introduce a common application form for registration, opening of bank and demat accounts and issue of PAN for foreign portfolio investors (FPIs). This is expected to “enhance operational flexibility and ease of access to Indian capital markets”.