How did the real estate sector react to Budget 2016? Find out
Anuj Puri, Chairman & Country Head, JLL India
To give him due credit, the Finance Minister
has definitely made a concerted attempt to manage expectations with a
balanced budget. While three of the real estate sector’s major
expectations – increased HRA deduction, removal of DDT from REITs and
boost to affordable housing by allowing 100% deduction on profits made
by entities constructing them – have been addressed, the Budget offered
no financial protection from project delays to home buyers.
Most first-time home buyers in the major metros
will be left out of the additional Rs. 50,000 tax exemption announced
today, as it is applicable only on houses worth up to Rs. 50 lakh with
loans of up to Rs. 35 lakh for houses. This announcement will mostly
benefit first-time home buyers in tier-III and tier-II cities. The
infrastructure sector was a major beneficiary today.
The biggest announcement with implications for
the real estate sector in India was removal of DDT from real estate
investment trusts (REITs).
REITs could become a reality soon – The
Dividend Distribution Tax (DDT) got exempted, clearing a final hurdle on
the way of the successful listing of REITs in India. We expect a few
listings to happen in the current year itself, either by financial
institutions or developers. Currently, around 229 million sq ft of
office space can be seen as REIT-compliant. If we assume that even 50%
of these get listed, we are looking at a total REITs listing worth USD
18.5 bn.
Road infrastructure and new land opening up –
Approximately 16-18 km of road construction per day has been achieved by
the middle of the current financial year, and the Budget has adopted
measures to significantly step up NHAI capabilities in this regards.
Roads infrastructure has great influence on real estate development,
particularly with the new land it opens up for development through
highways and feeder routes.< /p>
Infrastructure creation – The Budget has
outlined revival plans for non-functional airports in partnership with
state governments, with a vision to spend around INR 100-150 crore on
each airport to make them functional again. This will a boost to
infrastructure in many tier-II and tier-III cities, and is without a
doubt positive for their real estate markets. A select few projects that
are commercially viable with good ridership could pick up pace in the
near term.
Release of land – Going by today’s Budget
announcements, Central PSUs are going to be encouraged to reduce their
exposure to excess land holdings. While availability of land for
development is definitely a constraint and the Land Acquisition Bill is
increasingly difficult to implement, an alternative route is to make use
of land holdings of central PSUs. We have seen this been done in the
railways budget, as well.
Retail sector – The revamp of the Model
Shops & Establishment Act is a welcome move and could help the
retail sector considerably. Unorganised retail could receive a fillip as
smaller shops will now also be given the option of remaining open for
all seven days of the week, like organised malls. While this will make
the high street retail real estate proposition a bit more attractive, we
will have to wait and see the implications from a labour market
perspective.
Office occupancy perspective – The
Budget made a strong case for promoting start-ups in India with 100% tax
rebate on profits announced for them for three years. In the recent
past, we have seen successful start-ups (particularly in the technology
and eCommerce sectors) becoming big and occupying a commendable share in
office space. As more start-ups get encouraged to commence operations,
we expect developers to offer more small mixed-use properties or
arrangements for sharing of office space to cater to this segment.
Importantly, clarity is expected on
GST implementation. The House got adjourned today when the Financial
Bill came up but the FM had earlier said the government will strive to
get it passed.
Amit Modi, Director ABA Corp and Vice President CREDAI Western UP
“We have to say that though the Union
Budget 2016 has been great on infrastructure, same is the not the case
when it comes of Real Estate and Housing! The Rs Rs 97,000 crore for
road construction was indeed the need of hours, we would have liked the
government to announce long pending demand of Single Window Clearance
for Real Estate Projects to bring in more transparency and Industry
Status to Real Estate Sector to avail legal low cost funding were
completely ignore since both these initiatives would been achieved
without putting burden on the budgetary allocation.
While we welcome the announced
interest rebate of Rs 50,000 for first time home loans if the value of
homes does not exceed of Rs 50 lakhs but would’ve like the ticket size
to increased to at least Rs 1 crore since the average apartment cost in
cities like Delhi and Mumbai are a lot more than Rs 50 lakhs, hence an
extremely small segment of first time home buyers will be able to
benefit from this initiative.
Similar is the case with Service Tax
exemption on housing construction of houses less that 60sq ms in the
cities. The proposed 100% deduction for profits of undertakings from
housing projects during June 2016 – March 2019 since the stipulated
timeline of 3 years is impractical since realistically speaking it takes
at least 5 years for a housing project to be delivered.
But since big infrastructure projects
always bring in huge economic multiplier effect for the whole country,
both in terms of employment generation and for the ancillary industries
we feel that it’s a good budget with a lot more room for improvement.”
Chintan Sheth, Director, Sheth Corp.
“The budget 2016 was supposed to be a very crucial
affair for the realty market. There were huge expectations from the
Finance Minister Mr Arun Jaitley but the result was a mixed-bag if the
real estate industry was considered” reckons Mr Chintan Sheth, Director,
Sheth Corp.The first positive from the budget was the exemption of DDT (Dividend Distribution Tax) from REITs. The DDT which is currently 15% was a major obstruction for the investment in REITs. Now we can expect a major chunk of investments flowing in the sector.
The other good thing in the budget was that the Service tax has been exempted for housing construction of houses less than 60 square metre i.e 645 square feet approx. This will help buyers who already had additional burden on them with various taxes. Also the First home buyers will get an additional deduction of interest of 50,000 provided value of house does not exceed Rs 50 lakh. The Finance Ministry has proposed 100% deduction to undertakings for construction of affordable housing. These initiatives will boost the affordable housing segment and will help in Government’s mission of “Housing for All”.
The Finance Ministry would pursue the implementation of GST before the Parliament. Introduction of GST will help in curbing multiple taxes which is a positive sign for the industry and result in buyers coming forward to buy property.
Though there were few good announcements to be mentioned, but the major ones were overlooked, added Mr Sheth.
The single window clearance has not been taken into consideration. There is not a proper roadmap for the real estate bill which was the most awaited and discussed topic last year. The bill will boost the entire industry and will definitely prove to be a game changer for the market. The impact of this bill will be profitable to both consumers as well as builders as it will bring transparency in the industry and confidence amongst buyers.
Ajay Jain, Head – Real Estate Group, Centrum Capital Ltd.
The budget focused heavily on the rural population
with funds for de-stressing rural economy and strengthening the
infrastructure. However the budget maybe a disappointment for the real
estate industry with very few initiatives taken towards reviving the
sector.
Relaxation of DDT in REITs -
Hopefully, with the government taking steps to do away with the DDT in
the Budget, this could single handedly revive the real estate sector as
well as provide a significant boost to the economy. This will remove the
bottlenecks and could result in more REIT listings by developers in
times to come. Eventually posing an opportunity to small investors at
considering an alternative class of investments.
Increase the limit of house rent
deduction – The Finance minister has increased the house rent deduction
from Rs 24000 to Rs. 60000, this will certainly benefit tax payers who
fall in this category & will leave more disposable income in hands
of common man/tax payers.
Service tax is proposed to be exempted
for housing construction of houses less than 60 square metre. This will
reduce cost of property to end customer particularly in affordable
segment. Many developers can work out feasibility of project considering
this aspect. This is likely to boost demand.
For First home buyers an additional
deduction of interest of 50,000 is proposed, provided value of house
does not exceed Rs 50 lakh. This will increase in disposable income in
hand of tax payer who is first home buyer.
100% deduction on profit is proposed
to undertaking for construction of affordable housing: This will be a
big boost to the developers in affordable housing as well as motivate
& encourage other developers who are currently not looking at this
space. In turn also benefit end user buyers by way of certain profit
element passed on to them by developers.
Prashant Solomon, Managing Director, Chintels India Ltd.
“Union Budget 2016 is comprehensive
and well-rounded with some positive initiatives for the real estate
sector. 100% deduction for profits to an undertaking from a housing
project for flats upto 30 sq. metres in four metro cities and 60 sq.
metres in other cities will benefit developers in the low-cost housing
space. Deduction for additional interest of Rs. 50,000 per annum for
loans up to Rs. 35 lakh for houses under Rs. 50 lakh will encourage
low-end buyers to invest in property. Excise duty exemption on Ready Mix
Concrete (RMC) will lower the cost for housing construction and, in
turn, encourage builders to pass on the benefits to home buyers.
Overall, we expected Finance Minister to be more aggressive for the real
estate sector during this budget regarding issues like industry status
and single window clearance.”
Anubhav Jain, Director, Silverglades
“While it’s a
pro-poor and pro-growth Budget, there have been no major announcements
for the real estate sector. Developers were looking forward to credit
break and single-window clearance for projects, which the govt has
failed to announce. On the other hand, additional tax deduction of Rs
50,000 for houses up to Rs 50 lakh and no excise on RMC for
self-consumption are positive initiatives to encourage affordable home
buyers and developers.”
Santosh Nema, Founder &CEO, BmatPro
“ Overall the Budget's direction is
positive with several macro factors making way for a better economic
regime. However, with three consecutive bad years for real estate that
left developers and other stakeholders gasping for revival, the
expectations were high. Although the additional income tax deduction of
Rs 1 lakh for home loans up to Rs 25 lakh taken by first-time home
buyers is positive but will not change the overall scenario of the
sector. Beside,s scrapping of dividend distribution tax on Real Estate
Investment Trusts (REITs) is a welcome move which would help developers
to raise funds, as this makes investments attractive for investors."
Arun Lakhani, CMD – Vishvaraj Infrastructure Ltd.
“The union budget 2016-17 is a step
forward for the welfare of the people and growth in the country. For the
infrastructure development the government has announced fund allocation
of at Rs 2.31 lakh crore that would aim to enhance the infrastructure
base of the country. Guideline for renegotiation of PPP contracts is a
long standing demand from international investors and will make the
investment environment much more risk neutral.
It is a big step towards overseas
funding comfort for PPP in infrastructure. 228% higher grants to gram
Panchayats & urban local bodies in accordance with FFC
recommendations will augment development process significantly in terms
of providing basic facilities like clean healthy water, sanitation, and
other basic amenities leading to smart towns of future.
This budget restores balance in Rural
Bharat and India Inc. The approach of the Finance Minister is one of
quantum jump rather than tinkering, which would accelerate the
development process and put the Indian economy on a sustainable growth
trajectory, while further expediting the “Make in India” programme and
‘Swaach Bharat Mission”.
Naveen Goel- MD, Casa Greens
It is big boost for affordable housing
where govt. is proposing additional exemption of Rs. 50,000 for housing
loans up to Rs. 35 lakh, provided cost of house is not above Rs. 50
lakh for first time buyers and it could be much better if govt would
have increased IT slab too.
Shivakshi Gogia- CEO, Ascent Group
The budget is good for affordable
housing segment where no service tax has been proposed for houses up to
60 sq. mt. and more exemption on housing loan under Rs. 50 lakhs. But
govt. should have provided relaxation in taxes for industry and
individual both.
Pawan Jasuja- Director, Finlace Consulting
For individual home buyers it is a
good news to get additional exemption of Rs. 50,000 for housing loans up
to Rs. 35 lakh per annum but I feel this could be up to 1.00 lakh if
govt. has not increased IT deduction for salaried. Monetary policy of
RBI can bring some more jump in market.
Kedar Joshi, CMO, Ahuja Constructions
The real estate industry had been
holding a lot of hopes from Union Budget 2016. The budget brings in
mixed bag of reactions to the real estate industry which has been hit by
slowdown and has been definitely looking for aturnaround. First time
homo Rs. 35 lakh, but at the same time it has to be ensured that the
cost of house is not above Rs. 50 lakh.The housing loan interest for the
first time home buyers definitely have a sign to cheer.
The budget has provided an exemption
of Rs. 50,000 for housing loans up te buyers and affordable housing
would boost the stressed residential sectors.
The budget brings in a boost to low
cost housing and this could bring in the demand for compact homes. The
move ofremoval of service tax on houses which are less than 60 sq meters
will see a sigh of relief to the middle class & lower middles class
home buyers. A nod to dividend distribution tax on REIT’s will bring in
stability and would combat few bottlenecks. We welcome Budget 2016 that
will make housing for all a reality
RK Arora, Chairman, Supertech
The Union Budget 2016 is a
disappointing one for the industry in general and particularly for Real
Estate Sector which was pinning great expectations on it. The only
significant relief announced in the Budget for real estate, is exemption
of Rs. 50,000/- for housing loans upto Rs. 35 lakhs and that too on
houses costing upto Rs. 50 lakhs. This nominal relief is available to a
very few and not to large section of home buyers as the cost of houses
has gone beyond Rs. 50 lacs.
Another relief the Finance Minister
announced in the Budget is service tax exemption for housing
construction of houses less than 60 sq. mtrs. which too is inadequate
and would not be available to large section of home buyers buying 2 BHK
and above flats.
The announcement of 100 per cent
deduction for profits to an undertaking in housing project for flats
upto 30 sq. metres in four metro cities and 60 sq. metres in other
cities, approved during June 2016 to March 2019 and completed in three
years makes it mandatory to obtain all clearances and complete the
project in 3 years. Further, the developer is liable to pay MAT also.
Further, the addition of 0.5% Krishi
Kalyan Cess on all services would cause additional burden on home buyers
who are already burdened with increase in local stamp duties and sector
rate increases in addition to cost escalation.
Manju Yagnik, Vice Chairperson, Nahar Group
We welcome the Finance Minister Mr.
Arun Jaitley’s Budget 2016 presentation today which is a positive budget
over all. This will give boost to the economy in long run as it focuses
on the expenditure rather than giving direct rebates. This budget as
expected proposes to give a larger thrust to affordable and low cost
housing, for buyers and for developers alike, bringing relief to the low
income group and mid segment of home buyers, who constitute the bulk of
housing demand in India. This has the potential to spearhead growth of
the ancillary industries allied to realty sector, increasing job
opportunities, thus creating a positive sentiment for the overall
housing sector.
The proposal of 100 per cent deduction
to undertakings for construction of affordable housing will give a
boost to affordable housing segment in the country.
No service tax for houses built less
than 60 sq. meters in non-metro and 30 sq. mt. in metro is a good move
as it will promote housing catering to the middle class who comprise the
largest segment of home buyers in the country.
Exemptions provided on housing loan
interest for first time home buyers and affordable housing will bring
little relief for the residential property market in metro cities where
there is maximum demand. Scrapping of dividend distribution tax on Real
Estate Investment Trusts (REITs) would help developers to raise funds,
as this makes investments attractive for investors.
Rental housing will get a boost as
those living in rented houses will get a deduction benefit from Rs
24,000 to Rs 60,000 under Section 88G.
First home buyers can avail an
additional exemption of housing loan interest of 50,000 provided value
of house does not exceed Rs 50 lakh comes a blessing for mid housing
segment of home buyers.
The Finance Minister’s assurance to
pursue implementation of GST, reform measures pending before parliament
has raised our hopes as this was one of our budget expectations from the
Finance Minister.
Overall, as compared to the previous
two budgets, this budget has been reasonably good taking into account
some of the sector’s requirement though not entirely. We would be happy
if the government would make a mention of our other demands such
conferring industry status, single window clearance, subsidized land
rates etc.
Rajeev Talwar, CEO, DLF Ltd
#vikaskabudget presented by Hon’ble
Union Finance Minister, Shri. Arun Jately, in the parliament with a
Desire, Dream and Vision to transform India, seems to be effectively
delivering on the social & economic agenda for Growth. Highlight of
the budget as I see was not the new reform / schemes, it was about how
the existing schemes and reforms are to be implemented.
Also a big positive from the
budget2016 was adherence to fiscal deficit and vision for prudent fiscal
management wherein improving the quality of government expenditure.
Another highlight of the budget was,
impetus on ease of doing business, wherein he has emphasized on
simplification / rationalization of some issues i.e. old PPPs can be
renegotiated, be it targeting large stuck infrastructure projects which
are stuck or may be Income tax concession for MSMEs. Hence FM has taken
care of almost all the pain points for Socio-economic issues.
Talking about real estate sector, we
are delighted with an additional tax benefit for first time buyers; this
will surely be a big boost to the industry & should help in
reviving the sector to an extent by bringing back home buyers although
now all eyes are on RBI Governor to come-up with further tax bonanza.
Proposal made by FM regarding Real
Estate Investment Trusts, wherein he proposed that any distribution made
out of income of SPV to the REITs and INVITs having specified
shareholding will not be subjected to Dividend Distribution Tax, will
definitely facilitate investments in the sector and will surely promote
many players to opt for REITS as a tool to raise money and bringing in
liquidity in the market.
Shri Arun Jaitley announced 100%
deduction for profits to an undertaking in housing project for flats up
to 30 sq mtrs. in four metro cities and 60 sq. mtrs. in other cities,
approved during June 2016 to March 2019 and completed in three
years slated to the vision of #housingforall
Overall a committed road-map is being set by the government, to be delivered in the times to come.
Aman Agarwal, Governing Council Member NAREDCO & Director, KV Developers
“We hail the budget speech presented
by Hon Finance Minister, Mr. Arun Jaitly. The budget is pragmatic,
wide-ranging and inclusive given the emphasis on infrastructure
development. It clearly lays focus on key areas of core sector growth,
inclusion, fiscal far-sightedness and tax streamlining. We sincerely
applaud the decisions made to boost the sector specially for affordable
category.
Major push for the first time home
buyers in the form of deduction for additional interest of Rs. 50,000
per annum for loans up to Rs. 35 lakh. Raise of HRA upto 60000 is really
commendable and would be directly favourable for middle income group.
With giving 100% deduction for
profits to an undertaking from a housing project for flats upto 30 sq.
metres in four metro cities and 60 sq. metres in other cities, approved
during June 2016 to March 2019. Also, Removal of Dividend Distribution
Tax (DDT) would pave the path of reality of REITs. Another one the
exemption of service tax on construction of affordable houses up to 60
sq. Metres. These reforms will surely help the investors and
developers.
However, we were expecting to get an
infrastructure status in the budget. This would have allowed the sector
reap some more benefits in terms of funding.
MR Jaishankar, CMD, Brigade Group
Overall the budget proposals are below my expectations. I would rate it 7 on 10.
While it is not a bad budget, it is
not a great budget either. Much more could have been done to give a
fillip to the industry since substantial effort is made to improve the
rural sector.
The proposal to boost Affordable
Housing is encouraging. It benefits both the end customer and the
Developer. For the Developer, there will be a saving of 13% to 14% on
tax on income considering MAT is applicable.
For Individual first home buyers, an additional tax break of Rs. 50,000 acts as a further incentive.
Exemption of Dividend Distribution Tax
on REITs was awaited and is welcome. Similarly, the extension of the
Sunset clause for SEZs to 31st March 2020 is also welcome.
Exemption of Excise Duty on RMC for affordable housing.
Other welcome measure is to bring back black money to the mainstream by introducing a Compliance Window.
Initiatives in doing ease of business particularly in Tax Administration.
Om Ahuja, CEO, Residential, Brigade Group
“Overall a good budget when it comes
to balancing multiple challenges economy is facing and maintaining
fiscal discipline. Retaining fiscal deficit in 2015-16 & 2016-17 at
3.9% & 3.5% without compromising growth oriented initiatives like
growth of rural economy, agriculture and farmers welfare, infrastructure
development & boost to employment and growth is highly
commendable. With multiple new taxes, cess, taxing dividends in hands
of investors over Rs.10 Lacs on the one side and undeclared income
disclosure scheme & multiple reforms in tax dispute resolution
framework on the other side reflects the Government intent to bring
better environment for “ease of doing business” & attract FDI for
“Make in India” initiative. For Real Estate Industry, few key
initiatives are a welcome step. Overall the budget for the Real Estate
industry is positive with three key initiatives:
Common man – Smaller
benefit for common man, deduction for additional interest of Rs. 50,000
per annum for loans up to Rs. 35 lakh sanctioned in 2016-17 for first
time home buyers, where house cost does not exceed Rs.50 lakh.
Affordable Housing –
(1) Service Tax Exemption on construction of affordable houses up to 60
square metres under any scheme of the Central or State Government
including PPP Schemes, (2) 100% deduction for profits to an undertaking
in housing project for flats upto 30 sq. metres in four metro cities
and 60 sq. metres in other cities, approved during June 2016 to March
2019 and completed in three years (3) Extending the excise duty
exemption, presently available to Concrete Mix manufactured at site for
use in construction work to Ready Mix Concrete will help the industry by
reducing the input cost.
REITs now a possibility -
Exemption of Dividend Distribution Tax for distribution of dividends by
SPVs to REIT & INVITs will now make REITs a possibility in India.
This will help the industry in creating newer avenues for raising
capital and capitalizing the income yielding assets. Investors in India
will now have a new attractive asset class to build long term wealth
with regular income.
Few industry expectations like
increasing tax deductions for common man for housing loan interest and
easing liquidity for the industry were missing but few initiatives
rolled out making affordable housing industry growth will now see
mission “Housing for All ” a possibility in India.”
Vishal Mirchandani, CEO, Retails and Commecrial, Brigade Enterprises Ltd
This budget clearly outlines the
Social Economic development agenda of the Central Government with
relative fiscal discipline which is good.
Good infrastructure development plans
announced along with planning budget penetration to rural areas. We see a
boost to roads, railways & rural development.
Rs 25000 crores recapitalisation of
PSU Banks may prove to be less as this year will be the year for
cleaning up balance sheets across the board and we may still see some
negative surprises in the sector. However the plan to soon propose a
roadmap for consolidation of PSU banks and setting up of Bank Board
Bureau headed by Vinod Rai is positive and shows that action is being
taken on the subject. So in essence, the budget is providing short term
boost as well as a structural road map for this important sector.
Almost all negatives have been avoided like Long term capital gains tax, service tax etc.
Real Estate positives :• Increase of HRA deduction at Rs 60,000/- , this is a broad based benefit.
• First time home buyers of homes less than Rs 50 lakhs to get higher interest deduction of Rs 50,000/-..
• Affordable housing sector has been identified for benefits on both cost and sale fronts in the development process.
• Extension of benefits to SEZs until 2020 provides time to realize associated benefits.
Government has announced a good structural approach to the country’s budget, it is now important that interest rates are reduced and private sector investment is accelerated.
It would have been better if the budget had made some positive provisions for home loans which would have made a significant positive impact on the economy
Rohit Poddar, Managing Director, Poddar Housing
"This government has finally walked the talk and has shown its seriousness for the affordable housing sector. The financial package they have announced will not only encourage but will also make new affordable housing projects financially viable. I welcome this long overdue move."
Rohan Bulchandani - Co-Founder & President REMI
The Union Budget 2016 outlines
infrastructure and skill development within the 9 pillars of the budget.
There has been a tremendous effort towards boosting the demand side of
the equation by a thrust on infrastructure spending and on improving
investment in the real estate sector by the abolishment of the DDT on
REITs. The allocation of Rs.2.18 lakh crores towards improving
connectivity with railways and the road construction target is an
additional boost to the infrastructure segment.
The 100% deduction on profits for
affordable homes up to 30 sq meters for metros and 60 sq meters for
non-metros, service tax exemption on construction of affordable homes
and an additional Rs.50 thousand deduction for buyers on homes of less
than Rs.50 lakhs is a positive step towards the governments 'Housing for
All' mission. Further, the budget has provided a necessary thrust
towards the skill development of 1 crore youth under the PMKY, which is
essential to meet the development requirements of the economy.
Ankur Jindal - COO, Sales, SVP Group
‘Housing for all’ became the real estate
focus of the budget today. The direct and indirect tax benefits for
affordable housing should boost the government’s smart city initiative.
Additional deduction of interest would incentivise the first time home
buyers to buy their dream home. The REIT/InvIT market should finally
take off now that the finance minister has granted dividend distribution
tax exemption. Now people can go for retirement homes, with a loan upto
35 lacs. They would get an additional 50,000 tax break. Seniors will
have to get loan with the help of their children as they may not be
directly eligible. Overall, the budget should have a progressive effect
on real estate sector.
Anshuman Magazine, Chairman and Managing Director of CBRE South Asia Pvt Ltd
“Overall this has been a good budget for the
industry. The most encouraging announcement has been the exemption of
Real Estate Investment Trusts (REITs) from Direct Distribution Tax
(DDT). While the fine print on the announcement needs to be reviewed, it
is hoped that having cleared this hurdle, companies will come forward
to set up REITs, which will be a game changer for the industry.
“Corporate real estate will additionally
benefit from the announcement of the sunset date for exemption of fiscal
incentives to Special Economic Zones (SEZs) being pushed forward to
March 2020.
“Although more could have been done to
revive housing demand in the country, the Government has extended
incentives on various fronts, especially for the Affordable Housing
segment. It has announced 100% tax exemptions for private players
constructing affordable housing of 30 sq.m in the four metros and 60
sq.m in other cities, approved during June 2016 to March 2019, and
completed within three years of the approval.
The Finance Minister also announced 100%
excise duty exemption for Ready Mix Concrete. An additional rebate of
INR 50,000 per annum on housing loan interest for first time home buyers
in the affordable segment for loans not exceeding INR 35 lakh, and for
properties not exceeding INR 50 lakh, was also announced.
“Additionally, rental housing has been
provided an impetus with an increase in the House Rent Allowance (HRA)
deductions. Those not receiving any HRA can now avail a standard
deduction of INR 24,000; while for those availing HRA, the limit has
been raised to INR 60,000 per annum for rented accommodation.
“The infrastructure sector was particularly
in focus in the recent Budget announcements, with a record allocation
for roadways and railways. There is also increased focus on Greenfield
ports as well as on the upgradation of underutilized / unused airports
and airstrips. In addition, various schemes have been announced to
rejuvenate private sector interest in infrastructure investments, via
Public–Private Partnership (PPP).
“The ease of doing business was in focus
too. Changes in the Companies Act, and early registration of new
companies and start-ups will facilitate the business environment in
India.
It is hoped that simultaneous implementation
of all these initiatives will be followed through, while the long term
funding issues for the real estate and construction sector will also be
suitably addressed.”
Shailesh Puranik, Managing Director, Puranik Builders Pvt Ltd
“The Union Budget 2016 presented by the
Finance Minister today has tried to infuse confidence in the real estate
market by unveiling a slew of measures to boost affordable housing, but
unfortunately it fails to recognise the sector with the ‘Infrastructure
Status’ (Industry) which we have been demanding for long.
We support wholeheartedly the Finance
Minister for some of the measures he has taken to boost affordable
housing by making provisions like 100 per cent deduction to undertaking
for construction of affordable housing and additional tax deduction on
interest paid for loan amount on homes less than Rs 50-lakh. The Finance
Minister has also addressed the issue of REIT through the exemption of
dividend distribution tax
Exemption of service tax for houses less
than 60-metres will also benefit the real estate developers engaged in
creating affordable housing in the Mumbai Metropolitan Region. The move
would also complement the Prime Minister’s ambitious dream project of
‘Housing for All’.
An increase in tax deduction from Rs 24,000
to Rs 60,000 for those living in rented houses will also benefit the
rented flat-holder, thereby complementing indirectly the housing sector.
The Finance Minister must be complimented
for rationalisation and simplification of the tax structure that will
reflect ease of doing business for the corporate sector in terms of
certain processes
However, the Finance Minister could have
done much more for the real estate sector—for example, the sector has
been clamouring for industry status since long but in today’s Budget
there was no mention of this. Similarly, the issue of a single-window
clearance system which would have tremendously benefitted the realty
sector was also left unaddressed".
David Walker, Managing Director, SARE Homes
“Union Budget 2016-17 is a mixed bag for the
real estate sector. We are pleased to see that the government has stuck
to the 3.5 per cent fiscal target as this will give head room for the
reduction in interest rates which will benefit all sectors of the
economy and particularly the housing sector.
The Finance Minister’s proposal that any
distribution out of SPV income to REITs and INVITs with specified
shareholding not being subject to Dividend Distribution Tax (DDT) will
spur investments in REITs. The additional exemption of Rs 50,000 for
housing loans up to Rs 35 lakh – provided the house cost does not exceed
Rs 50 lakh – is welcome too. Excise duty exemption on ready-mix
concrete used in construction sites augurs well for the construction
industry.
While plans to meet the fiscal deficit
targets are a good move, some of the key issues in the real estate
sector have been given a skip. The real estate sector’s expectations of
being accorded Industry and Infrastructure status have not been
accepted. Furthermore, the fact that there was no mention about action
being taken to expedite GST and the Real Estate Development Bill is
disappointing.”
Rajesh Prajapati, MD, Prajapati Constructions
The hon Finance Minister has offered sops to
the affordable housing front, Mr Prajapati said and pointed out that
there was a definite direction laid out in this budget towards
implementing the ambitious Housing For All by 2022.
100% tax deduction to entities constructing
30 sq mtr houses in 4 metros n 60 sq mtrs in other areas is a major
booster to the affordable housing sector. Also it is probably the first
time that affordable housing has been defined in terms of size n not
value of flat. It seems that the Housing Industry is finally being
deservedly recognized as one of the major contributor to the GDP of the
nation.
The exemption of service tax on construction
of houses up to 60 sq mtr is a welcome step. This will provide relief
to a section of home buyers opting for 1RK / 1BHK / small 2BHK flats.
Similarly, the additional deduction of Rs 50,000 on interest payment for
first home buyers on house value of upto Rs 50 lakhs is a welcome step.
However it will have limited impact as it leaves out a large section of
home buyers in Metro cities. It would have been better if the
Government would have extended this additional tax exemption for homes
valued at Rs One crore for tax deductions in Metro cities.
He expressed the hope that the commercial / office and retail market will benefit from REIT as tax exemption from DDT to SPVs as well as Funds will give a boost to these funds and facilitate easy flow of much needed funds .
Sachin Sandhir, Global Managing Director – Emerging Business, RICS
“The finance minister has managed to give
the real estate, construction & infrastructure industry a much
needed boost by combination of investment measures, easing of
bottlenecks and incentives to encourage growth – specifically for the
much needed areas of affordable housing and REITs. It is a forward
looking budget with tremendous focus on leveraging technology to
implement big ticket reforms – be it an e-portal for farmers, digital
repository for education or tax accountability measures. Dispute
resolution mechanism for construction contracts along with credit rating
system will be highly beneficial for this important but dispute ridden
sector. Removal of DDT on REITs will encourage REIT listings, which
itself can be a game changer for the Indian real estate market. The
budget has also given the affordable housing market its due importance
and announced series of measures in-line with the housing for all
scheme.”
Devina Ghildial, Managing Director – South Asia, RICS
“The Government's strong commitment to
investment in public infrastructure should definitely be lauded. The
impetus provided is critical for improved productivity to boost
long-term economic growth and has been demonstrated with stepped up
allocation for infrastructure development, rural infrastructure and
affordable housing. While the budget may not have lived up to the
expectations of the sector, developers do have some reason to cheer.
With Dividend Tax on REITs being scrapped, investments will become
attractive and fund raising easier. Also, the proposed 100% deduction to
undertakings for construction of affordable housing will provide a much
needed 'shot in the arm' for the residential sector.”
Rana Kapoor, MD & CEO, YES Bank
“FY17 Budget has provided a
strong growth direction to the Indian economy. The Finance Minister has
managed to balance the need to prioritize social sector requirements
with economic and business imperatives. The segmented 9-Pillar Approach
with well carved out deliverables will ensure execution clarity and
focus. By adhering to fiscal deficit aim of 3.5% the Budget creates room
for complimentary monetary policy rate cut of 50 bps in the near term
and 75-100 bps in 2016, conditioned on favorably evolving macros. Key
measure to increase the allocation to infrastructure with an impressive
outlay of INR 2.2 lakh crore will help to re-energize the growth
multiplier, while the specific measures to improve ease of doing
business and favorable tax treatment for start-ups and MSMEs will go a
long way in boosting job creation”.
Venkatesh Gopalkrishnan - President and CIO of Shapoorji Pallonji Real Estate.
“The Exemptions provided on housing loan
interest for first time home buyers and affordable housing would provide
a boost to the stressed residential sectors and is likely to spur
supply of affordable homes demand. Scrapping of dividend distribution
tax on Real Estate Investment Trusts (REITs) would help developers to
raise funds, as this makes investments attractive for investors. It is
considered to be one of the biggest hurdles left in making REITs
financially viable for Indian commercial stakeholders. With most of the
hurdles getting removed, we may see introduction of REITs in the Indian
market soon.
Also, the move to provide 100
percent deduction for profits to an undertaking from a housing project
for flats upto 30 sq m in four metro cities and 60 sq under certain
conditions will provide the necessary motivation for developers to
develop good quality affordable houses thus catering to the large demand
in this segment.
The government's service tax
exemption on houses less than 60 sq m, and the additional exemption of
Rs 50,000 for housing loans up to Rs 35 lakhs for homes not above Rs 50
lakhs will both likely improve first-time home buyers' sentiment.”
Rajesh Goyal, Vice President CREDAI-Western UP & MD, RG Group
Finance Minister Mr. Arun Jaitley
presented the Budget 2016 by acknowledging that the Global Economy is in
crisis and stressed on the need to develop our rural areas. The Budget
compliments the Pradhan Mantri Awaas Yojna that envisages the Mission of
‘Housing for All’ by 2022 as it proposes 100% deduction on profits to
undertakings for construction of affordable housing and Service Tax
waiver on purchase of Houses of less than 60 sq m. These two moves will
prove to be revolutionary as this will cause extra cash flow for the
Developers and lure them to invest in Tier III and IV cities, which were
often neglected in the past. The budget also motivates the first time
buyers and makes their dream of owning a home even more feasible by
proposing an additional Interest reduction of Rs. 50,000 on home loan of
upto Rs. 35 lakhs.
Avneesh Sood, Director, EROS Group
There has been considerable push
provided to the basic infrastructure in the country which will provide
the much needed cushion for real estate to prosper. Take for example the
sum of INR 97,000 crore being kept aside for the construction of
highways, both national and state along with rural road development. We
all know that improved connectivity will help and encourage developers
promote real estate even in the far flung regions and hence this
decision will prove to be a great asset in the years to come.
Deepak Kapoor, Director, Gulshan Homz & President CREDAI-Western UP
This budget is a clear indication
that the government now wants to work seriously on its affordable
housing initiative. The impetus was there but the push was missing but
now with benefits attached both for developers and buyers, it is sure to
be a hit. It can be said that tax exemption to developers from the
profits earned on an affordable housing project will attract more and
more of them and similarly exempting customers on the service to be paid
by them during the purchase will make these house more affordable for
them.
Ashok Gupta, CMD, Ajnara India Ltd
The budget along with the clear
agenda of targeting the affordable housing segment also had the middle
class in mind wherein the tax exemption on HRA has been increased from
the initial INR 24,000 to INR 60,000. This will go a great way in
helping a family actually utilising the allowance which was earned in
the form of HRA. Additionally, this will give them the option of sparing
more for house rent and hence increasing the demand for rental housing
in the sector. Increased demands will mean increased number of investors
showing interest and an overall upliftment of the sector.
Deep Kantawala, Head – ICS Corporate Advisors Pvt Ltd
"The Finance Minister presented Modi
government’s third budget today citing that the Indian economy is
moving in the right direction.
He announced that his budget was
based on nine pillars namely Agriculture and farmers' welfare, rural
sector, social sector including healthcare, education, skills and job
creation, infrastructure, financial sector reforms, ease of doing
business, fiscal discipline, tax reforms to reduce compliance burden.
Overall this is prima facie a neutral budget, will have to get into the
fine print for the complete picture.
- Exemptions provided on housing
loan interest for first time home buyers and affordable housing will
give a much needed relief to the stressed residential sectors which has
been in a downswing since last year. Service tax exempted for housing
construction of houses less than 60 sq. m. Affordable housing--100%
deduction on profits for flats up to 30 sq.m in metro cities from
2016-19; MAT will apply;
- The budget also does away with
dividend distribution tax on Real Estate Investment Trusts (REITs),
which would help developers to raise funds, as now the investment
becomes attractive particularly for foreign investors.
- The budget provides an outlay
of Rs. 2,21,246 crore for infrastructure in 2016 -17. This will give a
boost to the infrastructure industry which needed a shot in the arm.
- Make in India--100% deduction of profits for start-ups; MAT will apply
Personal Finance
- Relief to people living in
rented houses--Deduction for rent paid will be raised from Rs 20,000 to
Rs 60,000 to benefit those living in rented houses, though this relief
is not for salaried individuals;
- Additional exemption of Rs. 50,000 for housing loans up to Rs. 35 lakh, provided cost of house is not above Rs. 50 lakh;
However there are some expectations that the budget does not fulfil namely:
- Enhance the deductible
allowance limits for leave encashment, medical, conveyance, education,
etc. as these have remained unchanged for some years now. This would
have increased the disposable income in the hands of the individual
hence helping increasing the demand for housing.
- 80C deductions should have been enhanced- Industry status to be given to real estate
- Banking sector should be incentivise to provide more funds to real estate
There are some good initiatives by
the budget for the economically weaker section of the society. However
for the real estate industry as a whole, the budget does not provide the
support and push that is required at the current critical stage. There
were more expectations from the budget by the real estate industry but
it falls short on it."
Gaurav Gupta, General Secretary, CREDAI RNE“The budget is a balanced and a growth oriented budget. Strong Push has been given to affordable housing by incentivizing developers of 100% Income Tax exemption on construction of houses up to 30 sq. meters in metros and 60 sq. meters in non metros. With a proposal of zero service tax on this, it will go a long way in creating enough housing stock where demand actual exists. Developers too will be motivated to construct as Income tax exemption is a must in thin margin affordable housing projects. By introducing an additional deduction of Rs 50,000 on interest for loan up to Rs 35 lakh, Finance Minister has given some reason to cheer to the first time home buyers. A major relief is that no excise will be levied on RMC produced at the construction site. Demand for industry status, raising limit on Interest repayment from 2 lacs to 4 lacs remain unheard which was looked upon with high hopes from the entire sector.”?
Manoj Gaur, President CREDAI NCR
“Union budget 2016 has focused on some key issues which is positive for real estate sector. In some major declarations made in the budget regarding affordable housing, it is clear that government is keen to give a boost to affordable housing segment, being also in lined with government’s initiative to provide housing to all by 2022. 100% Service tax exemption has been given to make houses up to 30 sq mtr in 4 metros and up to 60 sq mtr in others. We believe that his policy for affordable segment will benefit the home buyers, especially the middle and lower income group. Increased tax rebate to 60000 will benefit those living in rented houses in a big way. Certain issues related to direct and indirect taxes have been addressed which is good. The biggest disappointment was that the real estate did not get the infrastructure status which was long pending demand of this sector.”?
“Union budget 2016 has focused on some key issues which is positive for real estate sector. In some major declarations made in the budget regarding affordable housing, it is clear that government is keen to give a boost to affordable housing segment, being also in lined with government’s initiative to provide housing to all by 2022. 100% Service tax exemption has been given to make houses up to 30 sq mtr in 4 metros and up to 60 sq mtr in others. We believe that his policy for affordable segment will benefit the home buyers, especially the middle and lower income group. Increased tax rebate to 60000 will benefit those living in rented houses in a big way. Certain issues related to direct and indirect taxes have been addressed which is good. The biggest disappointment was that the real estate did not get the infrastructure status which was long pending demand of this sector.”?
Deepak Kapoor, President CREDAI Western UP
“The budget has brought relief to the housing sector; however, overall expectations of the realty sector were high which have not been met. In a move to boost the housing demand, deduction of Rs 50000 has been given on a loan of up to 35 lakhs. There has been allocation of funds for infrastructure development which includes construction of road networks and setting up of 300 urban clusters. Affordable housing has been given a fair share. This would kick start the real estate in Tier 1 and Tier 2 cities along with new mushrooming areas in major cities as well. Direct Dividend Tax (DDT) is now exempt from REITS. This was very much required to make REITS efficiently functional. Much to our disappointment, Industry status and single window clearance system could have been the biggest game changing reforms for real estate sector which were not even mentioned in the budget.
“The budget has brought relief to the housing sector; however, overall expectations of the realty sector were high which have not been met. In a move to boost the housing demand, deduction of Rs 50000 has been given on a loan of up to 35 lakhs. There has been allocation of funds for infrastructure development which includes construction of road networks and setting up of 300 urban clusters. Affordable housing has been given a fair share. This would kick start the real estate in Tier 1 and Tier 2 cities along with new mushrooming areas in major cities as well. Direct Dividend Tax (DDT) is now exempt from REITS. This was very much required to make REITS efficiently functional. Much to our disappointment, Industry status and single window clearance system could have been the biggest game changing reforms for real estate sector which were not even mentioned in the budget.
Sanjay Rastogi, Director Saviour Builders Pvt Ltd
“With a fiscal deficit target of 3.5 %, government had come up with a very growth oriented and a balanced budget which may fetch positive results in long run. There have been some major announcements for Realty sector which are good for both customers as well as developer community. Our long pending demand for Real estate regulator and single window approval has not been addressed which is quiet disappointing. But, the move to improve the affordable housing segment through tax exemptions is commendable. Rent-givers have also increased tax exemption limit of Rs 60000 which was earlier subjected to Rs 20000 only. Furthermore, infrastructure development has been assigned a decent amount which eventually will benefit real estate.”
“With a fiscal deficit target of 3.5 %, government had come up with a very growth oriented and a balanced budget which may fetch positive results in long run. There have been some major announcements for Realty sector which are good for both customers as well as developer community. Our long pending demand for Real estate regulator and single window approval has not been addressed which is quiet disappointing. But, the move to improve the affordable housing segment through tax exemptions is commendable. Rent-givers have also increased tax exemption limit of Rs 60000 which was earlier subjected to Rs 20000 only. Furthermore, infrastructure development has been assigned a decent amount which eventually will benefit real estate.”
Om Chaudhry, Founder & CEO of FIRE Capital and Chairman & CEO of Astrum Value Homes
“We had lot of hopes from the budget, some of which have been fulfilled while others remain unmet. On the whole, the demands of real estate sector have not been fully met and budget has fallen short on our expectations. There have been some important subjects which have been touched by the government satisfactorily. Affordable housing has been addressed suitably by giving 100% deduction to entities to make houses up to 30 sq mtr in 4 metros and up to 60 sq mtr in others. First-time home buyers will now be getting an additional deduction of Rs 50,000 on interest for loan upto Rs 35 lakh where the cost of house should not exceed Rs 50 lakh. Such steps will boost the housing demand and will reduce the burden on the pockets of home buyers. No clarity on implementation of GST and RERA bill is again a setback for the sector.”
“We had lot of hopes from the budget, some of which have been fulfilled while others remain unmet. On the whole, the demands of real estate sector have not been fully met and budget has fallen short on our expectations. There have been some important subjects which have been touched by the government satisfactorily. Affordable housing has been addressed suitably by giving 100% deduction to entities to make houses up to 30 sq mtr in 4 metros and up to 60 sq mtr in others. First-time home buyers will now be getting an additional deduction of Rs 50,000 on interest for loan upto Rs 35 lakh where the cost of house should not exceed Rs 50 lakh. Such steps will boost the housing demand and will reduce the burden on the pockets of home buyers. No clarity on implementation of GST and RERA bill is again a setback for the sector.”
Anil Kumar Tulsiani, CMD, Tulsiani Constructions & Developers Pvt. Ltd.
“There have been some important declarations in the budget for real estate sector but many of our demands still remain pending. Industry status, GST & RERA bill, single window clearance system were looked upon with high hopes from the entire sector but have not been fulfilled. Well-thought decisions on affordable housing have been taken to boost the demand in this segment. Announcement to set 300 rurban clusters under Shyama Prasad Mukherji Rurban Mission and allocation of funds for infrastructural development are other positive reforms for realty sector.”
Rohit Gera, MD, Gera Developments & VP, CREDAI – Pune Metro
“Given the challenging economic conditions, the Finance Minister has done a remarkable job. Showing a clear road map for farmers to double their income in 5 years, focus on infrastructure, capitalization of banks as well as reducing tax terrorism are welcome steps.
Government has given a major push to infrastructure in this budget by allocating huge funds for the road and rail sector. Announcement on development of new greenfield airports, revival of undeserved airports, highway upgradation, bringing stalled road projects back on track and constructing more rural roads will give much needed boost to the realty sector and put the smart cities initiative on a fast track.
On the subject of housing, there are a number of measures addressed toward the consumer as well as the industry with a view to address the housing shortage in the country.
The consumers are benefitted with greater interest deduction for first home buyers, as well as an enhanced deduction from Rs. 24000 to Rs. 60000 for rent paid where there is no HRA provision.
For the industry, the objectives of meeting the housing shortfall are unlikely to be met for a number of reasons. First being that the project has to be completed within 3 years with the Occupancy Certificate (OC). Given the time, the OC takes leaves about 30 months to complete the project. When combined with the clause that the project must consume 80% or 90% of the FAR, means the projects will only be small sized so as to meet the time line criteria.
Secondly, the bill says the scheme is applicable to the cities of Mumbai Delhi, Kolkata and Chennai and 25 km around these. However, for all other areas it is applicable only to the municipal or cantonment jurisdictions. This means areas outside the municipal limits are excluded from the scheme. It is likely that this is a drafting error as the letter doesn't match the spirit, but as written the scheme will not make a major impact.”
Navin Makhija, Managing Director, The Wadhwa Group
“The real estate industry, which had pinned high hopes on Union Budget 2016 for revival has welcomed this proposal. The budget’s direction is positive with several macro factors making way for a better economic regime. The proposal to provide additional exemption of Rs. 50,000 for housing loans up to Rs. 35 lakh is quite optimistic. However, few more amendments in the residential housing sector would have worked out better for the sector. But we hope there is a strong reinforcement in the real estate industry this year.”
Getamber Anand, President - CREDAI National
In this year’s Union Budget, our
Finance Minister has taken the right steps to boost housing and ensure
that 'Housing for All by 2022' becomes reality. CREDAI welcomes the
announcement, on the supply front for Private sector's participation and
housing for all by 100% income tax exemption on such houses besides the
MAT 30 sq m in metros and 60 sq m in non-metros. This will encourage
the private sector to reach these areas that accommodate about 90% of
the shortage. 100% exemption will actually increase the IRRs on such
ventures. On the enabling side to the home buyers, the increment of a
deduction of INR 50,000 on the home loan for a house of INR 50 lakh is a
very big attraction. Moreover, there will be a net to net saving of
50,000 rupees a year for such home buyers. Considering there has been a
100% exemption of service tax on such houses as well. The increase of
deduction on rent paid on a house from INR 24000 to INR 60,000 will also
result in a saving of about INR 12,000 to INR 13,000 a year.
It is overall a very positive budget
for the real estate sector and CREDAI is certain that this will spur
the market and induce the home buyer who has been waiting ever since for
some special incentives to actually be able to buy a house. Best part
is that there is a timeline fixed for delivery of such affordable
houses. All we ask for now is speeding up of the approval process as the
whole project needs to be delivered in a time frame of about 3 years.
So a single window clearance system of course would be a big enabler.
Now the next task for CREDAI is to convince the state urban local bodies
because by-laws are a state subject to increase the densities in their
by-laws, to reframe the method of calculation of densities so that
smaller units can be made in all projects.Another important point is the rationalization of the income tax act and small pain-points which existed earlier and were contrary on the government's claim of 'ease of doing business' such as excise on RMC which is for captive use, has been positively addressed. This shows the government's intent to actually make ease of doing business a reality. So rationalization of the entire tax act will also be a big boost to the sector to step up supply of affordable housing.
Sanjaya Gupta, M.D, PNB Housing Finance Limited
“The FM presented a very finely balanced budget. So far, as the housing sector is concerned, the Union Budget for the FY 16-17 is in line with Prime Minister’s vision of ‘Housing for all’ by 2022. Tax reforms made by the government are indicative of centre’s seriousness towards giving a much required fillip to the housing sector. The industry has been expecting initiatives that can directly translate into benefits for the end consumer, thus increasing the velocity of transaction and improving the market sentiment. The additional tax exemption of Rs 50,000 for the first time home buyers is certainly a welcome move. With this we expect a spur in sales and far greater traction of growth in the affordable housing segment.”
JC Sharma, VC & MD, Sobha Ltd
In the given economic environment, this Budget is overall balanced and is growth oriented with immense capacity to unlock the initiatives taken by this Government. As far as the housing sector is concerned, it has come out to be the primary beneficiary. While cars, luxury items, jewellery, travelling, dining, tobacco have all become costlier housing sector has gained the much needed attention.
1. The 100% deduction for profits to an undertaking in housing project for flats up to 30 sq. metres in 4 metros and 60 sq. metres in other cities approved during June 2016 to March 2019 and completed in 3 years will encourage supply in the affordable housing segment. This is subject to Minimum Alternate Tax.
2. The proposal that distribution made out of income of SPV to the REIT and Infrastructure Investment Trusts (INVITs) having specified shareholding will not be subjected to Dividend Distribution Tax (DDT), in respect of dividend distributed after the specified date, is a progressive step. This step is likely to promote REIT and attract new investments
3. Another good step is the deduction for additional interests of Rs. 50,000 per annum for loans up to Rs. 35 lakhs sanctioned in 2016-17 to first time home buyers, where the cost of the house itself does not exceed Rs. 50 lakh. This is directly beneficial for both buyers and sellers and will perk up the market sentiments.
4. The exemption from service tax on construction of affordable houses up to 60 sq. metres under any scheme of the Central or State Government including PPP Schemes is another step in the right direction.
5. Exemption for rent paid goes up from Rs. 24,000 to Rs. 60,000 which will augur well for the rental segment of the housing sector.
6. Furthermore, the excise duty exemption presently available to concrete mix manufactured at the site for use in construction work to ready-mix concrete is a welcome move for the industry.
7. The Budget proposal to digitize land records is in the right direction which will render land records free from encumbrances.
We hope all these will help give the much needed fillip to the housing sector.
K Soni, Chairman and Managing Director of Eco Recycling Limited
"This is one of the finest budget where the
importance is given to circular economy by increasing the power of
buying, in hands of the poorest of the poor farmers, other low income
group and the increase in the opportunities for the employed and
unemployed youth by having an access to the financial and other
resources, thereby by creating more thrust will give E-Waste more boost
to the industry, environment and employment"
Pramoud Rao, Promoter Managing Director, Zicom Group
“The highlight of the budget was its special thrust on agriculture and measures taken to double the income of farmers. in this budget we can see a lot of focus on rural areas. The crop insurance scheme and other allocations shows the government’s tremendous thrust on improving farmers welfare. The linking of rural roads, 100% electrification by 2018 and a lift in farmers income are positive signs. I feel, even if you double the farmers income it would stand less than 20,000. It could have increased more. But whatever that has been announced for rural improvement should be welcome”.
Ratul Puri, Chairman, Hindustan Powerprojects.
Sanjay Mehta, President, Metal Recycling Association of India (MRAI)
"The Budget has brought down the customs duty on
imports of brass scrap from 5% to 2.5%, which will help the brass scarp
users for metal recycling. But the duties on imports of other
categories of scrap such as steel scrap, stainless steel scrap, zinc
scrap, lead scrap, aluminum scrap, copper scrap have not been reduced.
For instance, Indian metal recycling industry imports 100% of its
stainless steel scrap requirements and the industry was demanding to
reduce the duty from the current rate of 2.5% to nil, which has not been
considered. The Metal Recycling Industry could have received a major
boost had the duties been rationalized, as these are vital raw material
for secondary metal producers and are not available in India in required
quantity."Pramoud Rao, Promoter Managing Director, Zicom Group
“The highlight of the budget was its special thrust on agriculture and measures taken to double the income of farmers. in this budget we can see a lot of focus on rural areas. The crop insurance scheme and other allocations shows the government’s tremendous thrust on improving farmers welfare. The linking of rural roads, 100% electrification by 2018 and a lift in farmers income are positive signs. I feel, even if you double the farmers income it would stand less than 20,000. It could have increased more. But whatever that has been announced for rural improvement should be welcome”.
“A welcome budget wherein the Government has addressed challenges being faced by the industry. The Government’s plans to meet the fiscal target is a welcome move as this will allow reduction in interest rates which will benefit all sectors of the economy. The focus on infrastructure spending through Deendayal Upadhayaya Gram Jyoti Yojna and the Integrated Power Development Schemes is clearly visible with a massive outlay of Rs 221,246 crore for 2016-17. The thrust on connecting the unconnected by May 1, 2018, augurs well for the Country and the sector along with the ‘ease of business’ will catch the attention of the investors for the sectors. This would be another significant goal post that government would have scaled, once UDAY is successfully implemented. The Government has also set itself a target that could be difficult to achieve – double farmers' income in the next five years and they should have also addressed the skilling issue that is likely to face in the near term with 10 million joining the employment market every year. One must applaud the Government for sticking by its vision and commitment and not get carried away”.
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. Additional exemption of Rs. 50,000 on housing loans up to Rs. 35 lakh for first time home buyers (on homes that cost upto Rs. 50 lakh) coupled with exemption of service tax on construction of affordable houses up to 60 square metres will reduce the cost of home ownership for the price-sensitive affordable home buyer. Furthermore, the exemption on profits for developers on housing projects (upto 30 sq. metres in four metros, 60 sq. metres in other cities) will incentivize 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.”
Snehdeep Aggarwal, Founder and Chairman, Bhartiya Group
The Finance Minister has rightly focused on housing
construction as an important part of the economy. We are enthused by the
steps taken for promoting affordable housing. Tax breaks for companies
making homes of less than 30 sq m in the four metros and 60 sq m in
other cities are welcome. Similarly, to ease construction, ready mix
concrete being exempted from excise is a very laudable step. Doing away
with service tax for homes up to 60 sq m is going to help the end user
and create more demand.“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. Additional exemption of Rs. 50,000 on housing loans up to Rs. 35 lakh for first time home buyers (on homes that cost upto Rs. 50 lakh) coupled with exemption of service tax on construction of affordable houses up to 60 square metres will reduce the cost of home ownership for the price-sensitive affordable home buyer. Furthermore, the exemption on profits for developers on housing projects (upto 30 sq. metres in four metros, 60 sq. metres in other cities) will incentivize 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.”
Snehdeep Aggarwal, Founder and Chairman, Bhartiya Group
VP Mahendru, chairman, Eon Electric
It is pleasing to see the Government sticking to its fiscal deficit target as it will give a boost to the overall economy. Changes in customs and excise duty rates for capital goods sector is an encouraging sign for industrial growth as it will help reduce costs and improve competitiveness of domestic industry. The proposal to provide 100% village electrification by May 1, 2018, is indeed very welcome as it in line with the Nation’s overall vision to provide 24X7 electricity. This will also create headroom for energy efficiency such as use of LED will be vital in achieving the Nation’s vision.
Kenny Ye, Managing Director, UCWeb India, Alibaba Mobile Business Group
Finance Minister Arun Jaitley has presented a well-rounded and constructive budget, focusing on most critical aspects of the economy. Thrust on farm sector, increased spending on rural development and infrastructure planning shows that this government means business. The record digitization plan outlined is another major positive. The new digital literacy mission scheme will cover 6 crore additional households and bolster employability of rural youth. There is also the much-needed thrust on entrepreneurship training, higher education and skills development that will help make India a knowledge base. While the reduction in corporate tax is welcome, it is applicable only to select companies and is a minor negative. Measures to reduce tax hassles and address disputes, on the other hand, are a positive. Tax exemption for Start-ups, amendments to Companies Act and allocation for Stand-up India scheme will further aid cost and ease of doing of business in India.
Farhan Pettiwala, President- Enactus India
“We welcome the initiative to setup 1500 multi-skill institute in India, and we welcome initiatives such as allowing retail traders to keep shops open on all seven days of the week. We however do not see any focus on Execution, no Execution agency for Governance, especially with funds of the magnitude of INR 1700 crores being provided in the union budget for Pradhan Mantri Kaushal Vikas Yojna. We also welcome exemption and reduction of duty under Nirmaya scheme for autism & differently abled, this will help students implement Enactus projects in India.”
Nigel Eastwood, Group CEO- New Call Telecom
“Overall I would view this budget to have a positive push to industries across the board. This budget focuses clearly on growth, development and job creation with particular focus on start-ups by giving them support via exemptions for 3 out of 5 years. With government initiatives like National Digital Literacy Mission for Rural Households and Stand Up India Scheme in place, these will help boost the startup scenario for the SCs, STs women entrepreneurs as it will help reach out to these under-served sectors of the population by facilitating digital technologies for consumers and markets. This is a balanced growth oriented budget with focus on accelerating on the fundamentals
Shuchin Bajaj, Founder Director, Cygnus Hospitals
“It is disappointing not to see healthcare in Government’s nine core pillars, quality healthcare is one of the basic necessity for major population of any country and government needs to include the same in their electoral roadmap and prepare robust framework for the same. Though initiative on health promotion scheme is much appreciated and announcement about National Dialysis Scheme is welcome as it has been a benchmark for the willingness of governments around the world to provide healthcare to its populations. Other initiatives to reduce export duty and affordable medicines were long overdue and will provide positive thrust to the sector.”
Vijay Agrawal, Executive Director, Equirus Capital
The Finance Minister has announced various incentives/ amendments to promoter Real Estate Sector in India, particularly affordable housing sector. The biggest one is affirmation of Pass through status of REIT. The Finance Minister has provided that any income / payment by SPV to REIT will not be subject to Dividend Distribution Tax and REIT will be pass through and tax will be payable in hands of investors. This will avoid double taxation.
The Finance Minister has also introduced income Tax exemption for companies engaged in construction of Affordable housing projects where area of each house will be 30 Sq meters for projects in four metros viz. Mumbai, Delhi, Kolkata and Chennai and 60 sq. meters for other cities. This exemption is applicable for projects which are approved between June 2016 to 31 March 2019. It is provided that such projects will be completed within 3 years from date of approval.
The interest deduction of Rs. 50,000 has been proposed under Section 80 EE towards interest paid on purchase of affordable house (upto Rs. 50 Lacs house value and loan amount upto Rs. 35 Lacs).
The budget also provides increased deduction of house rent under Section 80 GG from Rs. 24000 to Rs. 60,000.
Under service tax, exemption has been provided for construction of affordable housing units having area of less than 60 Sq Meters subject to conditions specified and also to houses constructed under HFA/ PMAY/ Slum Rehabilitation schemes. This will be a big relief for house buyers.
Praveen Jain, President,NAREDCO
National Real Estate Development Council (NAREDCO) welcomed the Budget as growth-oriented which will provide impetus to agriculture, infrastructure and rural sector development, besides providing incentive to affordable housing by allowing 100% deduction for profits to an undertaking from a housing project for flats upto 30 sq mtr in four metro cities and 60 sq mtr in other cities, approved during June 2016 to March 2019 and is completed within three years of approval, allowing Rs. 50,000/- additional deduction of interest on home loan for loans upto Rs. 35 lakh sanctioned during next fiscal year, for first time home buyers, provided the value of house does not exceed Rs. 50 lakh and exempting Service Tax on Construction of affordable houses upto 60 sq mtr under any scheme of Central or State Govt. including PPP. Another proposal to stimulate housing activity in the budget is to facilitate investment in Real Estate Investment Trust (REIT) by disallowing DDT.
Deductions provided on profit from Construction of affordable houses upto 60 sq mtr carpet area and home loan interest for first time home buyers would boost depressed housing sector, said Shri Parveen Jain, President, NAREDCO, adding that scrapping of Dividend Distribution Tax (DDT) on income distributed to Real Estate Investment Trusts (REITs) and INVITs make investments attractive for investors. Popular investment tool the world over, REITs works similar to mutual funds where individuals and institutions pool in money to invest in leased office or retail assets.
Anuj Goel, Executive Director, KDP Infrastucture Private Limited.
"The budget is positive and balanced.Exemptions on home loan interest rates for first time buyers and for affordable housing will optimize the homebuyer sentiments. It will also encourage the customer to take decision to buy their dream home and will also boost the affordable housing segment and real estate sector as a whole. Scrapping of dividend distribution tax on Real Estate Investment Trusts (REITs) is a welcoming step also the reduction in service tax for houses built under 60 square metres will lead to only positive growth of the sector."
National Real Estate Development Council (NAREDCO) welcomed the Budget as growth-oriented which will provide impetus to agriculture, infrastructure and rural sector development, besides providing incentive to affordable housing by allowing 100% deduction for profits to an undertaking from a housing project for flats upto 30 sq mtr in four metro cities and 60 sq mtr in other cities, approved during June 2016 to March 2019 and is completed within three years of approval, allowing Rs. 50,000/- additional deduction of interest on home loan for loans upto Rs. 35 lakh sanctioned during next fiscal year, for first time home buyers, provided the value of house does not exceed Rs. 50 lakh and exempting Service Tax on Construction of affordable houses upto 60 sq mtr under any scheme of Central or State Govt. including PPP. Another proposal to stimulate housing activity in the budget is to facilitate investment in Real Estate Investment Trust (REIT) by disallowing DDT.
Deductions provided on profit from Construction of affordable houses upto 60 sq mtr carpet area and home loan interest for first time home buyers would boost depressed housing sector, said Shri Parveen Jain, President, NAREDCO, adding that scrapping of Dividend Distribution Tax (DDT) on income distributed to Real Estate Investment Trusts (REITs) and INVITs make investments attractive for investors. Popular investment tool the world over, REITs works similar to mutual funds where individuals and institutions pool in money to invest in leased office or retail assets.
Anuj Goel, Executive Director, KDP Infrastucture Private Limited.
"The budget is positive and balanced.Exemptions on home loan interest rates for first time buyers and for affordable housing will optimize the homebuyer sentiments. It will also encourage the customer to take decision to buy their dream home and will also boost the affordable housing segment and real estate sector as a whole. Scrapping of dividend distribution tax on Real Estate Investment Trusts (REITs) is a welcoming step also the reduction in service tax for houses built under 60 square metres will lead to only positive growth of the sector."
Aman Nagar, Director, Paras Buildtech
"Overall the budget’s direction is
positive with several macro factors making way for a better economic
regime. However, with the consecutive bad years for real estate there
were few facets been ignored as the expectations were high. Exemptions
provided onHousing loan interest for first time home buyers and
affordable housing is really appreciating move. Investment plan of 970
billion rupees ($14.1 billion) on building roads will help to complete
work more quickly which would further help in urbanization of places and
development of various real estate projects. The proposed real estate
bill on REITs will revive the realty sector in India."
Mohit Goel, CEO, Omaxe Ltd.
Mohit Goel, CEO, Omaxe Ltd.
"The industry wholeheartedly
congratulates the Hon’ble Finance Minister for presenting a growth
oriented budget. It focuses on three key areas of Agriculture,
Infrastructure and Skill development, which is likely to have a positive
impact on manufacturing, consumption and real-estate sector.
With Hon’ble Finance minister sticking to Fiscal Deficit target of 3.5% for 2016-17, it provides ample scope to Reserve Bank of India to lower interest rates, thereby benefiting the sector.
Scrapping of Dividend Distribution Tax on Real Estate Investment Trusts (REITs) is another positive announced in the budget. This would help develop an additional funding mechanism to the sector and at the same time would give an opportunity to both individuals and institutions to invest in leased office and retails assets.
By removing Service Tax on construction of houses up to 60 square metres under government scheme including PPP Schemes – the budget has provided a renewed impetus on affordable housing.
Some other announcements in the budget 2016-17 like providing additional interest deduction of Rs 50,000 per annum to first time home buyers, albeit with conditions; 100% deduction for profits to an undertaking in housing project for flats upto 30 sq. metres in four metro cities and 60 sq. metres in other cities approved and completed within a specified period and lastly, extension of excise duty exemption, presently available to Concrete Mix manufactured at site for use in construction work to Ready Mix Concrete, are small, yet beneficial steps for real estate sector.”
Vikram Kotnis, Founder and Managing Director, Amura Marketing Technologies Pvt. Ltd.
The demand for the mid income segment is high and tax collected by the government from this sector is 10-14%, hence the budget could have provided a relief in service tax for 80-90 sq. mt. segment (compact 2bhk). “
With Hon’ble Finance minister sticking to Fiscal Deficit target of 3.5% for 2016-17, it provides ample scope to Reserve Bank of India to lower interest rates, thereby benefiting the sector.
Scrapping of Dividend Distribution Tax on Real Estate Investment Trusts (REITs) is another positive announced in the budget. This would help develop an additional funding mechanism to the sector and at the same time would give an opportunity to both individuals and institutions to invest in leased office and retails assets.
By removing Service Tax on construction of houses up to 60 square metres under government scheme including PPP Schemes – the budget has provided a renewed impetus on affordable housing.
Some other announcements in the budget 2016-17 like providing additional interest deduction of Rs 50,000 per annum to first time home buyers, albeit with conditions; 100% deduction for profits to an undertaking in housing project for flats upto 30 sq. metres in four metro cities and 60 sq. metres in other cities approved and completed within a specified period and lastly, extension of excise duty exemption, presently available to Concrete Mix manufactured at site for use in construction work to Ready Mix Concrete, are small, yet beneficial steps for real estate sector.”
Vikram Kotnis, Founder and Managing Director, Amura Marketing Technologies Pvt. Ltd.
“We would like to congratulate the
government for presenting a promising budget. The budget is in alignment
with the PM’s vision - housing for all.
The budget delivers a good move for the
low income group, below 60 sq mtrs, in the affordable housing segment
as it eases out the service tax. 100% exemption of profit for
developers and exemption from service tax for construction of houses
less than 650 sq feet will spur new launches in the affordable segment.The demand for the mid income segment is high and tax collected by the government from this sector is 10-14%, hence the budget could have provided a relief in service tax for 80-90 sq. mt. segment (compact 2bhk). “
Simarjit Bhogal Snr Consultant MB Infrabuild Pvt Ltd.
With the increasing consumer base,
demand for housing is a basic necessity has come to the forefront of
even the middle class population for India. Culturally, an average
Indian aspires to buy a home and thus seeks to create his asset base.
Recognizing the need of the hour, Government of India has made
affordable housing a national agenda with a mandate of 22 million homes
by 2022. The Union cabinet has also passed the Real Estate Bill and it
has various positive measures for the industry such as single window
clearance for real estate approvals. This will be an opportune time to
lead the real estate sector towards the affordable housing goals. The
Ministry of Housing and Urban Poverty Alleviation (MHUPA) released a
report: Affordable housing in Partnerships in December 2013 and has
categorized incentives for affordable housing, such as financing options
for the low income group, previously ignored for housing
finance. Though we see these positive announcements being made, real
estate still remains elusive for the common man in India and a lot needs
to be done to meet the affordability of a home buyers in India.
Government can consider introducing certain tax incentives in the
forthcoming budget to make real estate affordable for the common man.
They may be like -
- Higher tax benefit on housing loan.
- Increase in timeline for under construction property.
- Higher tax deduction for repayment of loan.
Budget of 97000 crores allocated for infra development -
The union budget 2016 also talks about allocation of 97000 crores for various infrastructure upgrades. This is a very positive move to elevate the real estate sector as improved infrastructure will support sustainable real estate development in the country.
Kashi Nath Shukla, Chairman Managing Director, Tashee Group
"The government has finally realized that ease of doing business has to become realism to spruce up the GDP. The government's service tax exclusion on houses less than 60 sq m, and the added exemption of Rs 50,000 for housing loans up to Rs 35 lakhs for residence not higher than Rs 50 lakhs will together expected to progress for the first-time home buyers feeling which will further give confidence to the buyers to spend more in this segment".
"Also the freedom for affordable housing projects would bring in a 15-20% benefit on profits after giving the MAT tax and for a real estate developer building up such a project would make it easier to draw foreign and domestic investment for housing projects"
Deepak Joshi, President and Chief Business Officer, Religare Housing Development Finance Corporation Ltd
This budget is well balanced as its focused on ease of doing business, Make in India, infrastructure and social sectors. The budget has laid out a clear roadmap to give impetus to Pradhan Mantri Avas Yojna(PMAY)-Mission Housing for all by 2022 by announcing tax sops for both individuals and developers for affordable housing sectors. Additional tax rebate of Rs 50000 to first time home buyers, 100% deduction of profit allowed to developers for construction of affordable housing and exemption of service tax for construction of housing units upto 60 sqmt is definitely going to contribute on demand and supply side of affordable housing.
"The
Finance Minister presented Modi government’s third budget today citing
that the Indian economy is moving in the right direction.
The union budget 2016 also talks about allocation of 97000 crores for various infrastructure upgrades. This is a very positive move to elevate the real estate sector as improved infrastructure will support sustainable real estate development in the country.
Kashi Nath Shukla, Chairman Managing Director, Tashee Group
"The government has finally realized that ease of doing business has to become realism to spruce up the GDP. The government's service tax exclusion on houses less than 60 sq m, and the added exemption of Rs 50,000 for housing loans up to Rs 35 lakhs for residence not higher than Rs 50 lakhs will together expected to progress for the first-time home buyers feeling which will further give confidence to the buyers to spend more in this segment".
"Also the freedom for affordable housing projects would bring in a 15-20% benefit on profits after giving the MAT tax and for a real estate developer building up such a project would make it easier to draw foreign and domestic investment for housing projects"
Deepak Joshi, President and Chief Business Officer, Religare Housing Development Finance Corporation Ltd
This budget is well balanced as its focused on ease of doing business, Make in India, infrastructure and social sectors. The budget has laid out a clear roadmap to give impetus to Pradhan Mantri Avas Yojna(PMAY)-Mission Housing for all by 2022 by announcing tax sops for both individuals and developers for affordable housing sectors. Additional tax rebate of Rs 50000 to first time home buyers, 100% deduction of profit allowed to developers for construction of affordable housing and exemption of service tax for construction of housing units upto 60 sqmt is definitely going to contribute on demand and supply side of affordable housing.
Deep Kantawala, Head – ICS Corporate Advisors Pvt. Ltd.
He announced that his budget was
based on nine pillars namely Agriculture and farmers' welfare, rural
sector, social sector including healthcare, education, skills and job
creation, infrastructure, financial sector reforms, ease of doing
business, fiscal discipline, tax reforms to reduce compliance burden.
Overall this is prima facie a neutral budget, will have to get into the
fine print for the complete picture
&bull Exemptions provided on housing loan interest for first time home buyers and affordable housing will give a much needed relief to the stressed residential sectors which has been in a downswing since last year. Service tax exempted for housing construction of houses less than 60 sq. m. Affordable housing--100% deduction on profits for flats up to 30 sq.m in metro cities from 2016-19; MAT will apply
&bull The budget also does away with dividend distribution tax on Real Estate Investment Trusts (REITs), which would help developers to raise funds, as now the investment becomes attractive particularly for foreign investors.
&bull The budget provides an outlay of Rs. 2,21,246 crore for infrastructure in 2016 -17. This will give a boost to the infrastructure industry which needed a shot in the arm.
&bull Make in India--100% deduction of profits for start-ups; MAT will apply
Personal Finance
• Relief to people living in rented
houses--Deduction for rent paid will be raised from Rs 20,000 to Rs
60,000 to benefit those living in rented houses, though this relief is
not for salaried individuals
• Additional exemption of Rs. 50,000 for housing loans up to Rs. 35 lakh, provided cost of house is not above Rs. 50 lakh
However there are some expectations that the budget does not fulfil namely
• Enhance the deductible allowance limits
for leave encashment, medical, conveyance, education, etc. as these have
remained unchanged for some years now. This would have increased the
disposable income in the hands of the individual hence helping
increasing the demand for housing.
• 80C deductions should have been enhanced
• Industry status to be given to real estate
• Banking sector should be incentivise to provide more funds to real estate
There are some good initiatives by the
budget for the economically weaker section of the society. However for
the real estate industry as a whole, the budget does not provide the
support and push that is required at the current critical stage. There
were more expectations from the budget by the real estate industry but
it falls short on it."
Contact
501, 5th Floor, Plot No – A-123/4,
Odyssey IT Park, Road No. 9,Wagle Estate
Thane (W) – 400 604, Maharashtra, India
Mobile : (+91) 9833 4583 23 E-mail: mchithane@gmail.com
501, 5th Floor, Plot No – A-123/4,
Odyssey IT Park, Road No. 9,Wagle Estate
Thane (W) – 400 604, Maharashtra, India
Mobile : (+91) 9833 4583 23 E-mail: mchithane@gmail.com
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