Budget 2019: Real Estate Industry Outlook

 

Direct & indirect benefits have come in a positive way to uplift housing sector.

Parth Mehta, Paradigm Realty

The Budget was clearly a hit for middle class segment with the tax exemption reaching out to Rs. 6.5 lakh per annum complimented with no TDS deduction if investments made under 80 C alongside savings increased upto Rs. 40,000 on interest income earned by individual from savings account or bank deposits. This clearly is a sign to boost consumer spending which in larger scheme of things boost the economy. Extension of benefits under section 80-IBA of the Income Tax Act is a good move to encourage affordable housing projects. The benefit of rollover of capital gains under section 54 of the Income Tax Act that has increased from investment in one residential house to two residential houses for a tax payer having capital gains, this will induce more homebuyers to invest in real estate. Further, the TDS threshold for deduction of tax on rent which is proposed to be increased from Rs. 1,80,000 to Rs. 2,40,000 will provide impetus to investments in real estate.

Proposal to extend the period of exemption from levy of tax on notional rent, on unsold inventories, from one year to two years is a relief for developers as slowdown impacted sales resulting in built up of same. The real estate sector is already going through a turmoil, with no clarity in GST, NBFC crisis, no support from banks alongside high interest rates, hence a little emphasis on the real estate sector with regards to the GST reduction and clarity on input-output credit which is pending could have been a big booster for the industry. Overall it was a decent budget and will upsurge consumption in the economy, however, revision of GST is priority which most of the stakeholder in the sector would have liked to see in the budget although Finance Minister explicitly mentioned that the group of ministers will review the same and if that one thing can be done i.e. GST rates can be lowered in the under construction properties than it may be a turning point for the sector and boost the sector at large.

Tax relief will further spur the demand for mid-segment housing

Amarjit Bakshi, Central Park.

The real estate sector had sets it sights on the budget to rejuvenate the consumer sentiment in the already ailing sector. We welcome Government’s recommendation to GST council for reduction in the existing rates on housing which will have a positive impact on the housing sales. Further, the tax relief to the middle class will augur well and further spur the demand for mid-segment housing segment that has shown early signs of revival.

No tax on notional rent on second house and capital tax benefit u/s 54 being increased from investment in one residential house to two residential houses also translates into a good news for the sector as it will have a role in reviving the industry.

Budget announcement favourable to the Coliving industry

Suresh Rangarajan, Colive

The budget announcement pertaining to real estate developers and home owners is favourable to the Coliving industry as it spells good news to the residents as well as the property owners. The notional rent being applicable to the 2nd home and an extension for rent-free unsold inventory being increased from 1 yr to 2 yrs will encourage developers to look at Coliving as an option.
The Finance Minister mentioned that a group of ministers would be formed to rationalize and reduce the incidents of GST on real estate transactions which will reduce the cost of inventory on the supply side.

Budget will boost the real estate and infrastructure industry

Vikas Oberoi, Oberoi Realty

This budget is very positive for the overall economy and will give a boost to the real estate and infrastructure industry. It has offered a much-needed incentives to boost customer sentiments which bode well for the industry. Full tax rebate for income up to rupees 5 lakhs will only spur growth. Customers can now save on capital gains tax arising from sale of a house by investing in two residential house properties as against one and no tax on deemed rent for up to two homes. Developers will get an exemption for two years from the date they receive occupancy certificate for the notional income tax on housing inventory as against one year earlier and government has extended the tax holiday for affordable housing by one year.