Budget 2020

Budget 2015: Home buyers will have to pay more

Anil Urs Bengaluru | Updated on January 24, 2018 Published on February 28, 2015

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Hike of 2% in service tax to push up costs, say realty companies

The increase of nearly 2 per cent in service tax is going to increase the overall costs of home buyers and those availing services from the real estate sector, creating further stress across the sector, said Sanjay Dutt- Executive Managing Director, South Asia, Cushman and Wakefield.

Except for REITs and curbing of benami transactions, there was no specific mention alluding to the sector this time around unlike the last Budget presentation.

The real estate sector is largely disappointed with this year’s Budget, that the Finance Minister has missed an opportunity to use real estate sector as another trigger for economic growth.

Shrinivas Rao, CEO-Asia Pacific, Vestian, said Budget 2015-16 has taken many positive initiatives to boost the Indian economy by empowering the individual State economies and creating ample scope for employment generation. Proposing to overhaul capital gains taxes to make way for the listing of Real Estate Investment Trusts(REITs) is a vital step forward for the setting up REITs in the country. Meanwhile, the increase in infrastructure investments by INR 700 billion in 2015-16 will open up vast opportunities for Real Estate Sector and positively impact its growth. A prudent and progressive budget!

Mike Holland, Chief Executive Officer, Embassy Office Parks, commenting on the Budget said “High focus and funds, benefits and entities in the infrastructure space particularly in areas of roads and power is welcome for the urban real estate industry.”

“Indicators that tax pass through on REIT’s will be implemented is welcomed – reference to a rationalization of the CGT in the restructuring is welcome as well as the indicator that the STT will apply, as opposed to the DDT. We will await and review the detail but if the understanding is correct, this has the potential to stimulate the REIT market in India which can release lower cost capital, increase liquidity in the real estate market and stimulate the next phase of the enhancement of India’s urban infrastructure,” he added.

M R Jaishankar, CMD, Brigade Group, said “It is a good growth oriented budget, with special emphasis on infrastructure, Swacch Bharat, introduction of pension schemes, curbing black money & improving ease of doing business. But as far as Housing industry is concerned, there is no special encouragement inspite of ‘Housing for All’ vision. To that extent for our industry, the budget is disappointing.”

Suresh Hari, Secretary, CREDAI Bengaluru said “the Budget is exciting and needs to be studied in depth. But overall there is a clear approach on infrastructure and growth. As far as the realty sector is concerned the following announcement encourages and helps the sector. Skill Mission enhancement,- which will bring in enhanced skilled work force.”

Long pending demands

Sanjay Dutt said Some of the long pending demands of the real estate sector pertaining to removal of DDT and MAT in SEZs, reintroduction of Section 80 -IB for low cost housing, extension of interest subvention for affordable housing etc. have been ignored yet again.

However, on the positive side, the withdrawal of Wealth Tax could boost investments by the middle-class and some sections of the high-net worth individuals, as they now no longer need to worry about getting taxed each year on long term investments in the sector.

Second, allowing rationalisation of capital gains on transfer of assets to REITs has actually taken care of a key demand by the sector. Further, the announcement of lowering Corporate Tax from by 5% in the next few years will also help to attract further investments from domestic and foreign companies.

Published on February 28, 2015
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