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Tata Capital > Blog > Loan for Home > How will Budget 2020 Affect the Real Estate Sector?

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How will Budget 2020 Affect the Real Estate Sector?

How will Budget 2020 Affect the Real Estate Sector?

While the new tax slabs from the 2020 budget have garnered a lot of attention, the real estate sector was not so pleased by the announcements. There have been a few positives and some negatives. Here’s how the new budget impacts the real estate sector:

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Optional tax slabs

The optional tax slabs may present a lower interest rate for people, but real estate buyers may have to forego them in order to avail tax exemptions for their loan payments. This can impact people’s decision to buy homes which will ultimately affect the real-estate market that is already experiencing a slump with many unsold housing properties.

Capital gains on real estate transactions

Up until now, when ascertaining business profits or calculating taxes from capital gains from real estate transactions, if the consideration value was 5% less than the circle rate, the difference in the amount was treated as an income for the buyer as well as for the seller. The finance minister announced an increase in the difference from 5% to 10% in this year’s budget. This will serve as a good incentive for investors to enter the real estate market.

Housing loans

The tax benefit for housing loans for first-time buyers has been extended to March 2021 from March 2020. This is an advantage for first-time home buyers and will encourage more people to buy homes and consequently add to the development of the real estate industry. For those interested in buying a home this year, Tata Capital home loans can offer attractive benefits and offers.

Additional Reads:- Budget 2020: Key Highlights and Takeaways

No industry status for real estate

The real estate space of the country has been demanding industry status for itself for some time now. However, the new budget had no provisions for this demand. The industry status could have resulted in low interest rates for loans, low cost of construction, and an increase in sales.

Liquidity and clearance

The real estate sector had several demands from the government which were not met in the budget. The sector’s liquidity issues were one of them. There was also a demand for a single-window clearance system for eliminating the delays in projects due to the involvement of multiple agencies and the need for several clearances. The approval process for projects will continue to be as it was, which may pose trouble for the sector.

Funding to infrastructure

The budget announced increased funding to infrastructural development. The government announced 12 lots of new highways covering a distance of 6,000 km to be completed till 2024. The country will also see 100 new airports under the UDAN scheme.

Additional Read:- What can tax payers expect from budget 2020?

Conclusion

The overall focus of the 2020 budget on public transport, healthcare, and employment, etc. is likely to increase the purchasing power of people which may ultimately fuel the real estate sector. The infrastructural plans are also expected to boost the industry and the country’s economy. However, one cannot overlook the fact that many of the industry’s pressing concerns have been ignored in the budget, which may affect the overall growth of real estate in India.

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