How-real-estate-industry-is-impacted-by-budget

By | March 22, 2019
In a democratic country where government is trying to pacify all in order to collect benefits in the upcoming elections, interim budgets of 2019 in India have inclined to provide to populist sentiments. With the acknowledgement of slowing down of the real estate industry, the populist budget of government has outlined actions to easy financial burden of developers while incentivizing the home buyers ahead of the next general election. Prime Minister Narendra Modi led Union government in the interim budget of 2019 has been announced several measurements which could be benefited the real estate sector greatly. Tax Rebate: The government has announced the tax exemption of upto Rs. 5 lakhs for the individual income holders and translating it into ‘zero tax’ for the people who are falling into the applicable slab. Thus, the proposal of giving tax rebate with the income of Rs. 5 lakhs can help in increasing the budget of the home buyers and provide a big boost to the demand of buying new property/flat/house. Excused Tax on Unsold Units for Two Years: Not only the offer of the tax rebate to the common people in India but Financial Minister Piyush Goyal also has proposed to excused tax on unsold housing units for two years. According to the Founder and MD at a Real Estate Consultancy Mr. Pankaj Kapoor, the budget is interesting for the real estate industry. The government has tried to help the industry which was going down by extending exemption for inventory tax on builders from one to two years as well a host of other measures to push up demand. Previously before the budget, all the unsold inventory of one year old of any real estate firms in Mumbai and all over India was considered as stock in trade and builder had to pay national rent on all those units. But the unsold inventories levels have been crossed over 6.3 lakhs across the top cities of India and the outgo from the builders were also huge. But now, increasing the exemption of paying the national rent from one to two years has been provided breathing space to the builders after this budget. Managing Director of Colliers International India, Mr. Joe Verghese said that the government has taken the correct steps of minimizing the risk that has been associated due to high levels of unsold residential inventory which could ultimately push towards the risk of liquidity in the markets affecting both banks as well as builders too. Extension Benefit of the Section 80 IBA by one Year The government has also extended the Section 80-IAB that allowed 100 percent deduction on the profits which could be generated by the real estate firms in Mumbai and real estate developers in India or any builders across India of affordable housing project till March 2020. Executive Directors of Colliers International India Mr. Sanjay Chatrath said that such announcements from the government helps relieve the pressure in the affordable residential real estate sector, measures announced are supply focused. Capital Gains Reinvestment in Two Houses: With the announcement of the government on reinvestment of capital gains in two homes, is expecting to boost the investment for the residential home. According to the 2019 budget, the capital gains has been extended to investment in two residential houses with an individual having capital gains up to Rs. 2 crores. This move will make the real estate market more attractive and can create more demand. The concept of capital gains up to Rs. 2 crore generated after selling one property can be invested in more than one property can provide opportunity to the people to purchase more properties. Increase Rental Income: The government has tried to boost sales of second homes by trying to relieve norms of genuine self occupiers who already have a house. The self occupied second homes, where family is living, consumers do not need to pay tax on national rental income. In case, if the property is let out, there will be no TDS deducted for upto Rs. 2.4 lakh. Previously the limit was 1.8 lakh but now it has been increased to 2.4 lakh which can attract more investors to buy second home for their earnings of rental income. Infrastructure Growth: In the new budget, government has announced of Rs. 19,000 crores for Sadak Yojana with a future vision that can boost up the social and physical infrastructure. Housing comes under PMAY and increase in the infrastructure development will move towards the positive steps of real estate industries and accessibility because such initiative will inspire more people to buy homes in various cities from different part of India as well as in outskirts area too. Real Estate Firms in Mumbai and Real estate developers from other part of India are thus already taken the step of moving towards the outskirts area to build dream home, bungalow, flat for your people with the new Sadak Yojana. See Also: House Vs Apartment! Which is better to buy?

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