New Delhi: Finance Minister Arun Jaitley (C) stands outside his office at North Block holding the briefcase containing the Union budget for 2017 and is flanked by MoS Arjun Meghwal (R) and Santosh Gangwar (L), on Wednesday,in New Delhi. PTI Photo by Vijay Verma(PTI2_1_2017_000008B)

Impact of The Union Budget on Real Estate Sector

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The Union budget 2017 yesterday got all interested glued on to their television sets and the internet in order to understand the implications for the coming year. It has presented a welcome respite to many with immense scope and benefits for real estate growth and development among other sectors. We shall focus on the impact of Budget 2017 on real estate here.

The real estate sector has received a much needed boost as Finance Minister Arun Jaitley in his Budget 2017-18 speech announced that the ‘Affordable Housing’ will be given ‘Infrastructure’ status, which is likely to result in reduced costs to the developer, the benefit of which he can pass on to the buyer. It is a welcome move and will act as a channel to meet the objectives of Housing to all by 2022. Mr Arun Jaitley also announced that National Housing Bank will refinance individual loans worth Rs 20,000 crore in 2017-18 which does present a positive change for individuals as well as the real estate sector.

Most importantly for individuals, the personal income tax for incomes between Rs. 2.5 lakh to 5 lakh has been reduced to 5%, and taxpayers in other categories will also save Rs. 12,500.

Some of the leading highlights for real estate sector in the Union Budget 2017:

  • Infrastructure status for affordable housing.
  • National Housing Bank to refinance Rs 20,000 crore loans.
  • 1 crore rural houses to be created by 2019.
  • Pradhan Mantri Awas Yojana to get Rs 23,000 crore.
  • Indra Awas Yojana will be extended to 600 districts.
  • Real estate developers to get tax relief on unsold stock as liability to pay capital gains will arise after 1 year of project completion and this will give some breathing time to the developers to liquidate their inventory.
  • Instead of built up area of 30 and 60 sq meters, the carpet area of 30 and 60 sq meters will be applicable for the entire country except for 4 metros which will make housing in non metros more affordable.
  • The window for availing 3 year profit-linked incentives for startups has been increased to 7 years against 5 years previously.
  • The holding period for capital gains tax for immovable property has been reduced from 3 years to 2 years.
  • New FDI policy is under consideration.
  • No cash transaction above Rs 3 lakh will be allowed.
  • Rs 2.41 lakh crore has been allocated to boosting infrastructure for transportation.
  • The total allocation for the infrastructure sector is Rs 3,96,135 crore.
  • The indexation for capital gains to be shifted from 01-04-81 to 01-04-2001.
  • The allocation for National Highways to be at Rs 64,000 crore.

Given all the above benefits among many others presented by the Budget 2017 for Real Estate, the future looks considerably positive for the real estate sector.

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