Union Budget’s Implication on Real Estate

The Finance Minister has definitely tried to manage expectations by having a balanced budget. The real estate sector’s major expectations i.e. incentive for first time home buyers, removal of DDT from REITs and boost to affordable housing by allowing 100% deduction on profits made by the entities constructing them have been addressed.

There is also a clear emphasis to make land records more transparent and it is an important parameter that will bring transparency in the real estate sector. The revamp of the Model Shops & Establishments Act is a welcome move and could help the retail sector considerably.

 

Central Budget, Positives for Real Estate

Common man:
Some benefits for the common man; deduction for additional interest of r50,000 per annum for loans up to r35 lakh sanctioned in 2016-17 for first time home buyers, where the house cost does not exceed r50 lakh.

Affordable Housing:

1. Service Tax Exemption on construction of affordable houses up to 60 sq. mtrs. under any scheme of the Central or State Government including PPP schemes.
    
2. 100% deduction for profits to an undertaking in housing project for flats up to 30 sq. mtrs. in four metro cities and 60 sq. mtrs. in other cities, approved during June 2016 & March 2019 and completed in three years.
    
3. Extending the excise duty exemption, presently available to Concrete Mix manufactured at site for use in construction work to Ready Mix Concrete will help the industry by reducing the input cost.

REITs Now a Possibility:
Exemption of Dividend Distribution Tax for dividend distribution of SPVs to REIT & INVITs will now make REITs a possibility in India. This will help the industry in creating newer avenues for raising capital and capitalizing income yielding assets. Investors in India will now have a new attractive asset class to build long term wealth with regular income.

 

Bangalore gets Rs 4,770 Cr in state budget

Bangalore has received a budgetary allocation of Rs 4,770 crore in the recent state budget announced by Karnataka Chief Minister Shri. Siddaramaiah. The allocation of Rs 4,770 crore has been made for the city’s overall development that will be taken up through various projects by Bruhat Bangalore Mahanagara Palike (BBMP), Bangalore Water Supply and Sewerage Board (BWSSB) and Bangalore Metro Rail Corporation Ltd. (BMRCL).