As the government is about to present the Union budget of FY-19 on February 1st, there are strong speculations that the budget will bring forth a slew of changes and recommendations in the real estate sector.
Below are some of the real estate highlights of 2018:
• The government allocated funds to affordable housing under the National Housing Fund.
• The commercial real estate sector was the most stable across major cities.
• In the wake of RERA and GST easing their firm implementation, the real estate market grew to be more transparent.
From speculations to recommendations, here’s how 2019’s Union budget may impact/change the sector:
Recommendations made by FICCI (Federation of Indian Chambers of Commerce and Industry):
• An amendment of Section 72A of the Income Tax Act to include real estate sector within its purview. the recommended amendment will increase the efficiency of the sector.
• Amending Section 2(42A) of the Act to reduce the period of shareholdings to 12 months (as applicable for listed shares) even in case of units of REITs listed on a recognized stock exchange.
Other changes to expect from the 2019 Union Budget:
• Heeding a long-pending demand to grant industry status to the real estate sector. With the previous budget, affordable housing gained a good status, infrastructure and benefits were visible. It’s about time to extend the same throughout the sector.
• If the government allocates the necessary funds for infrastructure improvement, it will not only improve the quality of homes but add to the reputation of the realtors as well. Furthermore, it will increase job opportunities and provide more money in the hands of consumers for spending, in turn, improving liquidity in the market.
• To offer relief to middle-class taxpayers has always been an expectation. To have them be more compliant to the concept of tax paying, the government can offer tax benefits like:
1. Reduction in income tax slabs, and/or
2. Higher relief on housing loan rates, and/or
3. Increase in the deduction limit under Section 80C from the current Rs. 1.5 lakh a year
• To increase the leeway for more funds for the real estate, it'll be advantageous to increase the financial limit for the NBFC (Non-Banking Financial Company). Last year, 50% developer finance was contributed by NBFC.
• If the government wants to act on the ‘housing for all’ initiative, they should consider easing the restriction of the release of the PMAY investment funds.
Conclusion
It’s a sincere wish of the real estate sector, that, for the upcoming union budget to be in favor of the above expectations. However, we, at Omkar Realtors and Developers, remain reasonably optimistic and will continue to do our part – which is to keep contributing to the market and fulfilling people’s dreams of finding safe, sound and great homes.
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