The third annual financial exercise by the NDA Government, Budget 2016 has opened a mixture of emotions in the researchers and analysts. This time the budget was widely anticipated to phenomenally revive the real estate sector. While some experts opinioned it as a balanced budget, others weighed it way below expectations.
Following are some of the important features of Budget 2016 to look forward for real estate sector.
- The annual House Rental Allowance (HRA) has been increased from Rs 24,000 to Rs 60,000. This can be expected to spur more growth of the rental housing across the country. This can also be expected to encourage the home ownership in the future days.
- First time home buyers are benefitted by an additional deduction of Rs 50,000 on home loan interest not exceeding Rs 35 Lakhs, given that value of the house is not exceeding Rs 50 Lakhs. The buying sentiments in smaller cities with lower housing costs shall accelerate owing to this.
- An immense outlay of Rs 221,246 crore is allocated for infrastructure, in which it features development of railways & road networks, small airports & ports etc. This will also splurge the real estate activities across the country.
- Removal of the major bottleneck of Dividend Distribution Tax (DDT) for REIT has also been addressed in Budget 2016. Now commercial stake holders do not need to pay DDT for real estate investment trusts. REIT will now be more viable for real estate investors.
- The budget has also allocated Rs 150 crores to modernize land records. By this all the details of land will be available online, increasing transparency and ease land acquisition activities, especially in rural areas. This will also add fillip to real estate sector.
- Service tax deduction for developers focusing on affordable housing in the budget 2016 will dive more developers to the construction arena. Given that the unit sizes should not surpass 30 sq mtrs in larger cities and 60 sq mtrs in smaller cities.
In contrary to the last two budgets, where it introduced some key flagship programs like the Make In India, Digital India, Housing For All 2022, Start up and Stand Up India, this year it was mainly initiatives to weave them together to make them successful. Budget 2016 in this sense has fairly taken steps to revive real estate sector. But even then the question is significant to Union Finance Minister Arun Jaitley, that has he made it large?
On the other hand, real estate is not just ending its wait for revival as now all eyes are glued to the ongoing Parliament session where significant Bills like the GST (Goods and Service Tax) and the long awaited Real Estate Regulatory Bill are to be tabled.