Union Budget is considered as one of the major events in the nation’s progress. Along with impacting the overall growth and development of the entire country, the budget also affects daily lives of citizens. Every segment of the society has their own expectations out of a budget and hence everyone keeps a close watch on it. And depending upon whether or not the budget meets the public demand, proposals made during a budget session receive both appreciation and criticisms. The Union Budget for the financial year 2017-18 was recently tabled and this budget session included several alterations and norms for the benefit of the citizens. The presentation of the budget itself was a new development as it was advanced by a month i.e. it was shifted to 1st February, as against the usual schedule of last working day of February. This development broke the colonial hangover to ensure speedier implementation of schemes that are being presented at the budget.
Among the various pro-citizen developments, Budget 2017 gave a commendable thrust to the real estate sector. One major development introduced during the budget was the grant of infrastructure status to the affordable housing schemes. This move will propel the growth of construction as well as the purchase of property in India. Here is a quick overview of how budget 2017 will have a positive impact on the inclusive growth of the real estate sector:
Pro-realtor move –The grant of infrastructure status to the affordable housing schemes was a strategic and practical move because there is a significant correlation between infrastructure and real estate. Along with resulting in an increase of property purchase, it will also result in the growth of the affordable home loans business and the emergence of affordable home loan lenders. Cheaper loans for budget housing developers will increase activity in this segment thereby advancing towards achieving the Government’s goal of Housing for All by 2022. In addition, developers will get a period of one year to pay tax on notional rental income on completed unsold residential inventory. The time limit for capital gains has been reduced to 2 years from the earlier 3 years in the light of considering it as a long-term gain. Also, developers of affordable housing will have a 5-year project completion period as against the earlier 3-year period.
Pro-buyer move – The formulation of the budget paid considerable heed to the need of housing for all. And, it was reflected in the fact that the budget proposed to complete 1-crore houses by 2019 for the houseless and those living in kutcha houses. It also announced a change in size requirement of affordable houses from built-up area to the carpet area of 30 square metres for municipal limits of 4 metropolitan cities and 60 square meters for rest of the country. This was a welcome move as it will make houses more spacious. In addition, a reduction in home loan rates will potentially bring down the cost of purchasing a house. This will make buying a house more affordable. However, Budget 2017 neither provided any additional income tax incentives to first-time home buyers nor provided higher tax savings on housing loans and house insurance premiums. It also did not raise house rent deduction limits. But, the proposed norms will certainly encourage people to buy property.
It is expected that Budget 2017 will increase development and purchase of property in India. When developers receive benefits, the same will reflect in the form of lower prices. Similarly, when home loan rates become cheaper, it will enable more people to buy property. All in all, real estate sector is all set to see growth in the near future.