Fillip to real estate, affordable housing, infrastructure segments

The Union Budget 2017 augurs well for real estate, affordable housing and infrastructure segments.

“The affordable housing sector is finally set to get infrastructure status. This was a long-awaited announcement. While we are yet to read the fine-print, this is indeed an important step to promote access to priority lending thereby spurring supply of low-cost housing units across various cities in India,” said Anshuman Magazine, Chairman – India and South East Asia CBRE.

He further said relaxation in area measurement as well as completion timelines to seek tax exemption are a welcome move. Further, the government has also increased allocation under the PMAY scheme. This will encourage home buyers and further boost participation from private players.

The government has also been accommodative of the concerns of the real estate sector. “The relaxation on long-term capital gains, joint development agreements, and tax rebates for builders will help reduce their tax liability,” said Magazine.

Commenting on the Budget, Mukesh Butani, Managing Partner, BMR Legal, said “An unexpected announcement in the Budget is the proposal to reduce the holding period from 3 years to 2 years for long-term gain on transfer of immovable property, this is going to boost the investment in the real estate sector.”

Neeraj Bansal, Partner and Head of Real Estate and Construction, KPMG in India, said: “Among the most important announcement was granting of infrastructure status to affordable housing development – a long pending demand of the sector. It has been complemented by increasing allocation to rural housing programme by more than 50 per cent.”

“By granting Infrastructure status to affordable housing, the Government acknowledges that affordable housing industry is an important driver of the economy. Affordable housing developers will now be eligible for several Government incentives, subsidies, tax benefits and most importantly institutional funding. The status could also mean that the Government may release land specifically for affordable housing development in central locations of major urban centres in India.” he added.

“Capital gains on JDA to be taxed only at product launch, 1 year tax exemption from notional rental income from unsold inventory and reduction of long-term capital gains tax period from 3 to 2 years provide respite to investors/developers of real estate. This helps especially those holding real estate inventory/stock. This is a great move to providing tax relief to developers in the residential sector where the sales have significantly dropped post demonetisation move,” Joe Verghese, Managing Director, Colliers International India.

COMMENT NOW