Union Budget 2017 was awaited with high hopes and it wouldn’t be an understatement if we say that budget did indeed stand up to the expectations of the people. This budget has mirrored all the economic reforms taking place in the country and it has many reasons in offering to bring smiles on the face of the common man. While the banking sector got the requisite boost with demonetization move that stirred sudden influx of cash into their system, it did translate into better situations such as, leap in credit take-off, something that was conspicuous by its absence since quite some time. Indian Real Estate sector, a prominent contributor to the 6-7% of the country’s economy has welcomed the budget and is expected to come back to track after a period of slump that it has witnessed in the recent past.
Budget 2017 impact on real estate – some good things to talk about!
Here are some of the positive things that grabbed the focal point of discussion and made the realtors actually sit up and take notice of what the future profitable trends in real estate are going to be.
- Affordable housing proposal: House for all by 2022 – this ambitious proposal put forth in the budget is seen as a milestone in the growth path of real estate industry. Such affirmative diktat by the Government is seen as a promising opportunity for the real estate developers who would be able to enjoy better cash flow. The credit take-off is surely going to be on higher side and the availability of easy, flexi-term loans would improve the cash situation in the real estate business. This move is certainly welcome by both the private and public undertakings and they are expecting to work in unison to make the best use of this fat opportunity thrown on them. A considerable shift in the interest towards affordable housing, that is given the status of ‘infrastructure’, is expected amongst private entities that will be given better chances of winning the tenders because of availability of ample opportunities around.
- No cash transactions above beyond 3 lakhs of rupees: Setting the cash transaction limit to 3 lakhs is perceived as cleansing action for making the real estate dealings transparent. Real Estate industry is suffering a lot due to exorbitant rates of the property arising from unfair practices and habit of non-disclosure. Thus, all payments of big size accepted in white instruments are likely to control the volatility in prices in the Indian real estate sector.
- Holding period for Long Term Capital Gains Tax on land and fixed assets increased to two years: A real estate deal does take a substantially long time to close. Both the buyers and the sellers need time and patience to find the deal that safeguards their interests to the best. The previous limit of six months was not sufficient to think of secondary sale and thus, the assets were not moving and the money was getting stuck in the process. Budget 2017 impact on real estate by this proposal is going to pave the way for more secondary sales and would induce liquidity into the sector. In addition to it, the previous basket of investment that consisted only of real estate avenues to avoid tax on Long Term Capital Gains arising from the profit on the sale of property is likely to get expanded. It will help the people, especially, middle class, to think of investing in real estate with open mind and with hope of making more money out of it.
- Unoccupied inventory is the biggest matter of concern for the real estate sector in India in the present time. It is actually the bad effect of speculative investment that is retracting the real estate industry from the path of growth. It also is causing abnormal volatility in the price of real estate assets. Thus, taxing such properties is a wise proposal to eradicate bad practices and bring stability in the pricing structure.
- Welcoming FDI: RERA is going to work in full force and as a result, the FIPB (Foreign Investment Promotion Board) is in the position to provide better prospects of cash influx through FDI route. Real Estate developers have welcomed this proposal whole-heartedly and expect it to help them protect the bottom line and see the cash constraints melting away.
- INR 60,000 crores allocated for highways: Connectivity is the biggest issue that restricts the real estate developers from exploring the outskirts of the cities. If the highway projects are started and reach completing on time, it would help the infrastructure development visionaries to expand their reach and come up with more residential and commercial projects with added confidence and better hope. Thus, it is straightaway going to open new avenues for investment for the professional realtors. Increased connectivity will ease out the hassles of shifting towards the outskirts of the city.
- 5% tax exemption for enterprises with turnover below Rs 50 crores: Demonetization did affect the medium scale players of the Indian Real Estate sector, shaking them up. To help them regain their lost foothold and to provide a breeze for covering up the losses, Government has proposed 5% tax exemption, a welcome move which was much needed in the present state of affairs.
- Tax benefit on interest paid to repay home loan: The home loan interest budget 2017 is the topic that certainly is making headlines. The first time buyers get the deduction of Rs 50,000 paid against the interest payment under certain terms and conditions. The cap of 2 Lakhs of Rs is set on the self-occupied property, which the taxpayers will be able to set off against the salary and other sources of income.
The last point has somewhat upset the middle salaried class and they feel demotivated for investing in real estate. Also, since no additional tax benefit is extended to the first time buyers, it is likely to make the path a bit difficult for the real estate developers to create the demand.
To conclude, the grass seems greener for the real estate professionals on the whole, and the overall budget 2017 impact on real estate is surely a positive one which will reckon with both the builders and buyers, creating a major boost for the real estate industry on a whole. With HousingMan you can be assured with the best of property deals from reputed builders.
