Hailing the moves as pro-growth, real estate players said that the announcements will help bring in demand
In a huge push for the government's 'Housing for All by 2022' scheme, Finance Minister Arun Jaitley announced a tax exemptions on profits on houses of up to 30 sq metres developed in metro cities, and 60 sq metres in other cities.
Over and above this, he also doled out an additional exemption of Rs 50,000 of housing loans up to Rs 35 lakh for first time home buyers. This, however, is only applicable if the houses are below Rs 50 lakh in value.
Hailing the moves as pro-growth, real estate players said that the announcements will help bring in demand for the real estate sector which has been stagnating for quite some time now.
Mahindra Lifespaces Sriram Mahadevan, Business Head - Happinest, Mahindra Lifespaces
It is heartening to note how the government has taken cognizance of the importance of the Affordable Housing segment towards making ‘Housing For All by 2022’ a possibility.
This budget provides some of the long standing stimulus needed to drive growth in the segment.
Exemptions for first time home buyers coupled with exemption of service tax on construction of affordable houses will reduce the cost of home ownership for the price-sensitive affordable home buyer.
Furthermore, the exemption on profits for developers on housing projects will incentivise increased participation by developers towards creation of much needed affordable housing stock in the country. Overall, these are supportive policies in the right direction that can boost consumer confidence and spur development in the segment.
Ajay Nahar, MD, Nahar Projects and Partner, Nahar Group
With 100% deduction of profits of undertakings from housing projects, the housing industry will see a rise in demand.
India needs over 100 million houses in the near future which will help increase the demand for new homes, especially the lower income group.
Housing for all by 2022 is a great initiative as the urban areas and Tier II cities can now be easily accessible. This will help developers to build more houses and the reduced tax benefits will add to the benefits of new home buyers.
Alternatively, this will also have a direct impact on the volume of cement and steel to be consumed in this sector wherein developers seek to build more affordable housing for lower- to mid-income group households. This initiative will also be a good move for individuals who opt for rental homes.
The buying capacity of the middle-income, upper-middle and even the HNIs will increase due to less tax burden and the exemption on home loans for first time home buyers.
With regards to the boost in infrastructure, Rs 2,18,000 crore has been allotted for construction of new roads and railways. This will see more flyovers and better roads and connectivity options and hence this will have a direct impact on the housing sector, which is a positive sign.
Developers can now look forward to building new homes in Tier II and Tier III cities and far suburbs which will increase the overall sentiment in the housing sector.
The Goods and Services Tax Bill could be a game changer for the real estate industry addressing the problem of multiple taxation and bringing in transparency in the sector.
Rishi Jain – Executive Director, Jain Group
The government is focusing on basics and the lower- and middle-income group with the obvious intention of boosting real estate purchases for these category of consumers.
As expected, the maximum benefits have been provided for affordable housing which is a welcome move.
By removing service tax on specified and affordable housing projects the government is playing its part in making homes more affordable.
First time home buyers getting an additional benefit of Rs 50,000/- on loans upto 35 Lakhs clearly demonstrates that the government wants more and more citizens to take the decision of buying their first home. This is a welcome news for affordable housing developers who now get access to whole new category of customers.
As always is with the Indian budgets, sufficient focus has been given towards to boost on infrastructure and development/repair of national and state highways.
Giving a 100% exemption on undertakings from housing projects in cities during June 2016 and March 2019 might be the biggest joker in the pack of real estate from this budget. Several stake holders including the Jain Group are eagerly awaiting the details of these particular announcements.
Over all a well balanced and back of basic budget thrust of Lower Income Group and Middle Income Group.
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