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The Union Budget has brought very little to cheer for the real estate sector in the country, according to Mr Anuj Puri, Chairman and Country Head at real estate consultancy firm, Jones Lang LaSalle India.
The rise in personal income-tax exemption limit has been passed of as “tokenism” as it would not be relevant for the “aspiring middle class home buyer”.
The two percentage point hike in service tax — from 10 per cent to 12 per cent — will lead to a disadvantage for the sector as it will push up the input costs for developers whose margins, according to him, are already under pressure.
“Proposals relating to allowing External Commercial Borrowings (ECBs) for affordable housing will help developers in timely execution of projects. This will result in higher volumes,” he said.
According to Mr Puri, a one per cent rebate for home loans of up to Rs 15 lakh on homes costing up to Rs 25 lakh will prove beneficial for developers in this segment.
“Exempting proceeds from sale of a residential property from capital gains tax if they are invested in equity or equipment of an SME provides home owners with more reinvestment options other than investing in yet another property or tax saving bonds,” he said while apprehending that the new reinvestment options might lead to a lowering of sales in the secondary market.
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