Finance Minister Nirmala Sitharaman’s announcement on income tax relief for homebuyers and developers will help clear unsold stock and boost demand in affordable and unsold segments.
“The increase in the differential between circle rates and agreement value — from 10 per cent to 20 per cent (under Section 43CA) – is indeed a good move. This limited-period offer (up to 30 June 2021) will benefit both developers and homebuyers,” Anuj Puri, Chairman, ANAROCK Property Consultants, said.
“For homebuyers, it is a clear added financial benefit to round off the existing offers and discounts. Additionally, the consequential relief up to 20 per cent to buyers of these units under Section 56(2)(x) of the IT Act for the said period will definitely boost demand, especially in the affordable and mid segments,” he said.
“For developers, this move will help clear unsold stock,” he added.
There are about 5.45 lakh unsold units across the top 7 cities priced up to ₹1.5 crore while another 49,290 units priced between ₹1.5 crore and ₹2.5 crore, according to ANAROCK Research.
The additional outlay of ₹18,000 crore for PM Awas Yojana (PMAY – Urban) is another step towards fulfilling the vision of Housing for All by 2022.
The additional outlay is over and above ₹8,000 crore already spent this year. It will help 12 lakh houses to be grounded and 18 lakh houses to be completed. This will help bridge the housing gap in the country to a good extent and is simultaneously an excellent economic growth driver by creating more employment, ANAROCK said.
Five years after the implementation of this ambitious scheme, Pradhan Mantri Awas Yojana (Urban) has made steady progress across States. Till August, 1.06 crore homes have been sanctioned of which 33 per cent or some 35.18 lakh homes are completed while another 66.23 lakh units have been grounded for construction.
“The Launch of ECLGS 2.0 that extends additional credit of up to 20 per cent outstanding as on February 29, 2020 to accounts that were Standard (SMA 0) as on that date will address the liquidity crisis to a certain extent. The one-year moratorium on principal payment is encouraging too. However, the restriction of SMA 0 accounts will deprive many borrowers particularly real estate developers. CREDAI hopes that the Government in line with Real Estate sector would reconsider the restriction of SMA 0 accounts,” the Confederation of Real Estate Developers' Association of India (CREDAI), President Satish Magar said.
The additional outlay of ₹18,000 crore for PMAY Urban will encourage many developers to consider taking up housing project under the scheme.
Project approvals announced under SWAMIH Fund have been aiding projects that were stuck in the final phase. The Government may consider making industry recommended relaxations to the eligibility criteria so that many more developers can access SWAMIH Funds, CREDAI said.
Increasing the permissible difference between selling price and circle rates (till June 30, 2021) will help developers to offload long standing unsold inventory without having any liability under Section 43CA for developer and under Section 56 (2)(X) of IT Act for homebuyers, CREDAI added.