The Interim Budget sought to liven India’s floundering real estate sector, which was hit hard by demonetisation and the implementation of the Benami Transactions (Prohibition) Amendment Act, 2016. At present, there are more than 6.73 lakh unsold housing units across seven major cities.

Adding to these woes, real estate developers were subjected to the Real Estate (Regulation and Development) Act, 2016.

To ease the burden, the Budget extended the benefit of tax exemption for developers by another year. “This will give a push to the affordable housing segment,” says Anuj Puri, Chairman, ANAROCK Property Consultants. It also helped the second home market with the tax exemption for notional rent on second self-occupied homes.

“For the housing sector to regain significant momentum, long-term investors who exited the residential market need to be wooed back. One possible way was to re-introduce the home loan benefit on second homes. The government’s move is certainly welcome,” Puri says.

Potential investors have received a boostwith the decision not to tax house rents up to ₹2.4 lakh, from the existing limit of ₹1.8 lakh. “This may encourage more investors to buy second homes, to earn rental income,” Puri adds. In addition, the period for taxing unsold inventory has been extended up to two years.

The roll-over of capital gains tax on the sale of houses has been increased to two homes. “This may incentivise genuine house buyers and investors to purchase new properties,” Puri says.

Overall, Puri thinks it was a “balanced budget” for the real estate sector.

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