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A home for all: Infra status builds Big hopes for realty

Affordable housing has got momentum with regards to profit-linked income tax exemption for promoters; will surely lift the sector

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Real estate is one sector that is quite enthused by this year’s Budget for one of their long-pending demands have been met. The government, besides announcing some major tax benefits for builders and buyers alike, has granted infrastructure to affordable housing.

Rajeev Talwar, CEO, DLF, said, “The Finance Minister has given infrastructure status to affordable housing and given it a period of five years (which was earlier three years) that means, 2022 is the target date for ‘Housing for All’.”

Affordable housing has got further momentum with regards to profit-linked income tax exemption for promoters. Instead of a built-up area of 30 and 60 square metre (sq mt), the carpet area of 30 and 60 sq mt will be counted. Also the 30 sq mt limit will apply only in case of municipal limits of the four metropolitan cities; for the rest of the country, limit of 60 sq mt will apply.

“This means the Finance Minister has set the game rolling for future of urbanisation. Nuclear families, young people require smaller houses. Infrastructure status will mean greater availability of money as profit from affordable housing will not be taxed and can be reinvested. With that being about 35 per cent extra money coupled with greater fund availability with the banks as well as lower interest rates, you should see a quantum leap in affordable housing projects which will also retain the price line at a moderate price level,” said Talwar.

Brotin Banerjee, CEO and MD of Tata Housing, said, “Easy and dedicated access to institutional financing, higher limit on external commercial borrowings will attract more investments and assure sustained growth of affordable housing. On the other hand, long-term financing at lower rates will reduce costs of construction for developers allowing them to pass on benefits to consumers.”

Besides, the deemed rental taxation will not come into play until one year after the occupation certificate. Also, the holding period for considering gain from immovable property will be reduced to two years from three years now.

“That means that the builder would be in a hurry to sell, therefore, he will moderate his price. He will sell it at a lower price but since the flat would be completed. Similarly, for the buyers, the FM has reduced the window for capital gains. Therefore, reinvestment is also put under pressure mode,” Talwar said.

“Overall, a confluence of the above factors and the recently reduced interest rate on home loans should help attract more investments into the housing sector and uplift the demand scenario. Now, we should see the momentum picking up,” Kamal Khetan, CMD, Sunteck Realty, said.

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