Real Estate Sector Expected More From Union Budget
When he started his Budget Speech, Finance Minister Arun Jaitley said that the Budget would focus on agriculture and rural economy. His is largely a 'socialist' Budget, says Niranjan Hiranandani, president, NAREDCO.
If not a populist one, the Budget is certainly a socialist one with major focus on rural economy, housing and employment. While the real estate sector was expecting more sops from the government in terms of tax benefits and policy intervention for fulfilling housing for all mission, it also expected appeasement for homebuyers with more cash-in-hand directives and key announcements that could have impacted property investors.
As the government continues to boost the affordable housing sector by setting up an affordable housing fund by the National Housing Bank under the umbrella of the Pradhan Mantri Awaas Yojana (PMAY), the move will encourage growth of industries ancillary to the real estate sector, in view of Mrinal Kumar, partner, Shardul Amarchand Mangaldas, one of the prominent law firms in New Delhi. Further, the relaxation of income tax adjustment in case of difference of less than five per cent between the circle rate and consideration for real estate acquisitions, is a welcome change.
The allied industries also seem delighted with the Budget as government focused on effective and timely execution of existing projects, Yadupati Singhania, CMD, JK Cement Ltd has shown confidence in the FM while he promises construction of 9,000 km highways by the end of FY19. Also, it was encouraging to see the reinforcement of the government's commitment to the Bharatmala Project, which will be a major boost to demand in the next financial year.
Few sector players were anticipating the government to further reinvigorate the sector by way of lowering the GST rates, allowing single window clearance and affording an industry status to the real estate sector. Amarjit Bakshi, managing director, Central Park thinks that the move might have contributed positively to hasten the recovery of the industry which is today one of the largest employers and contributor to country's GDP.
Mani Rangarajan, Chief Business Officer – Platform Business Unit, Housing.com, said, “Union Budget 2018 has attempted to be inclusive and empower sectors such as agriculture, infrastructure and for that I laud it. However, now more than ever, as the real estate sector grapples with the combined effect of muted demand, after the demonetisation, real estate law and GST, I believe industry status for the real estate sector, combined with a higher interest deduction for homebuyers, would have been a much-needed reprieve for the industry.”
The precursor for Union Budget 2018 for the real estate sector started with the notification of the GST council to extend the concessional rate (of GST) acquired under the Credit Linked Subsidy Scheme (CLSS) for Housing for All Mission effectively came into force as on January 25, 2018. This now brings the current GST at 8 per cent instead of 12 per cent for under-construction homes. Ashish R. Puravankara, managing director, Puravankara Limited opines that the Union Budget for 2018-2019 demonstrates an encouraging growth story for India.
While many stakeholders are calling it a disappointing budget from the perspective of private sector involvement, Sarjan Shah, MD, Group Satellite has said that the Budget has unfortunately ignored the stressed and vilified real estate sector that is in desperate need of Government support through specific targeted tax breaks as it helps in affordable homes construction more viable.
Another step that government has missed out is the increase in the limit of tax deduction for housing loans up to Rs 5 lakh from present limit of Rs 2 lakh per annum. According to Amit Modi, director, ABA Corp and vice president, CREDAI Western UP, the measure would have brought the much needed fillip to the infrastructure sector.
Since Budget 2018-19 was the last full Budget before the upcoming Lok Sabha elections, the Indian government has not given much reasons for the realty sector to smile, believes Ravish Kapoor, director, Elan Group