Bringing much-needed cheer to the real estate sector, Finance Minister Arun Jaitley announced a slew of measures for the sector, which are expected to lift buyer sentiment.

In an effort to realise the Centre’s flagship mission ‘Housing for all by 2022’, Jaitley announced a 100 per cent deduction for profits to an undertaking from a housing project for flats up to 30 sq m in four metro cities and 60 sq m in other cities, approved during June 2016 and March 2019 and completed within three years of the approval. “Minimum Alternate Tax will, however, apply to these undertakings,” he added.

Affordable housing

This would sharpen the focus of affordable housing developers on the largely ignored segment, said Sanjay Dutt, Managing Director, India, Cushman & Wakefield, adding that, “the caveat of housing space limits should have been equitable, and the three-year window for project completion could have been longer as approvals and construction typically take a long time.”

For first-time home buyers, the Budget proposed a tax deduction on additional interest of ₹50,000 per annum for loans up to ₹35 lakh sanctioned during the next financial year, provided the value of the house does not exceed ₹50 lakh. This is expected to encourage low-end buyers to invest in property.

Lower-cost loans

“In effect, it will reduce the cost of loans, which will boost demand for housing in the budget to mid-range segments,” said Shishir Baijal, Chairman & Managing Director, Knight Frank India.

However, developers were looking forward to credit breaks and single-window clearances for projects, which the government has failed to announce, said Anubhav Jain, Director, Silverglades.

REITs

Clearing the main hurdle for listing of Real Estate Investment Trusts in India, Jaitley announced that any distribution made out of the income of special purpose vehicles to the REITs and InvITs (Infrastructure Investment Trusts) having specified shareholdings will not be subjected to Dividend Distribution Tax.

The Budget also extended the excise duty exemption, currently available to concrete mix manufactured at site, to ready-mix concrete. This is expected to lower the cost of housing construction.

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