Key Hits from the Budget
Key Misses from the Budget
Key Economic Highlights
INDUSTRY REACTS
Mr. Avneesh Sood, Director, EROS Group
There has been considerable push provided to the basic infrastructure in the country which will provide the much needed cushion for real estate to prosper. Take for example the sum of INR 97,000 crore being kept aside for the construction of highways, both national and state along with rural road development. We all know that improved connectivity will help and encourage developers promote real estate even in the far flung regions and hence this decision will prove to be a great asset in the years to come.
Mr. Deepak Kapoor, President CREDAI-Western U.P. & Director, Gulshan Homz
This budget is a clear indication that the government now wants to work seriously on its affordable housing initiative. The impetus was there but the push was missing but now with benefits attached both for developers and buyers, it is sure to be a hit. It can be said that tax exemption to developers from the profits earned on an affordable housing project will attract more and more of them and similarly exempting customers on the service to be paid by them during the purchase will make these house more affordable for them.
Mr. Ashok Gupta, CMD, Ajnara India Ltd.
The budget along with the clear agenda of targeting the affordable housing segment also had the middle class in mind wherein the tax exemption on HRA has been increased from the initial INR 24,000 to INR 60,000. This will go a great way in helping a family actually utilising the allowance which was earned in the form of HRA. Additionally, this will give them the option of sparing more for house rent and hence increasing the demand for rental housing in the sector. Increased demands will mean increased number of investors showing interest and an overall upliftment of the sector.
Mr. Rajesh Goyal, Vice President CREDAI-Western U.P. & MD, RG Group
Finance Minister Mr. Arun Jaitley presented the Budget 2016 by acknowledging that the Global Economy is in crisis and stressed on the need to develop our rural areas. The Budget compliments the Pradhan Mantri Awaas Yojna that envisages the Mission of ‘Housing for All’ by 2022 as it proposes 100% deduction on profits to undertakings for construction of affordable housing and Service Tax waiver on purchase of Houses of less than 60 sq. mtrs. These two moves will prove to be revolutionary as this will cause extra cash flow for the developers and lure them to invest in Tier III and IV cities, which were often neglected in the past. The budget also motivates the first time buyers and makes their dream of owning a home even more feasible by proposing an additional Interest reduction of Rs. 50,000 on home loan of upto Rs. 35 lakhs.
Mr. Rupesh Gupta, Director, JM Housing
The budget announcement has come out with a set of mixed reactions from the sector. One of the biggest hits coming out from the budget is the news for dividend distribution tax removed from REITs, which will finally open the gates for it. Secondly, affordable housing front has received a major thrust for both; developers as well as first time buyers. But the government has missed out on the bigger picture which is the need of the hour such as granting of the Industry Status and implementing Single window clearance system for overall price reduction of properties and timely delivery of the projects. Ray of hope for GST bill and RERA bill is still there with the Budget Session still a long way from finishing.
Mr. Kushagr Ansal, Director, Ansal Housing
The Union Budget 2016-17 will go down in the history books as one of the most balanced budgets for the Indian real estate sector. At one side we saw the absence of government’s role for timely approvals of the projects through single window clearance, but making REITs fully functional and removing DDT from it, will be a big add for the future demand. Income groups falling under lower and middle class categories will make the most out of this Budget as Rs. 50,000 annual tax exemption for a loan extending up till Rs. 35 lakh for a property valuing not more than Rs. 50 lakh for the first time buyers has been declared. Indirect benefits for the developers have been received through promotion of affordable housing development, but a big miss was observed by not granting the industry status.
Mr. Vikas Bhasin, MD, Saya Group
The government has left no stones unturned in the budget for promoting its Housing for all mission. Even the infrastructure sector has received a mammoth boost from the government by allocating Rs. 97,000 crore for urban and rural roadways development. Although, the modern day developers will now have to shift gears and expand their avenues by introducing more affordable housing projects to reap out the highest benefits. Also, the rental housing demand is sure to pick up in the sector which will now promote the development of more 1 and 2 BHK units. The budget still had a lot of scope for important decisions and with session still in progress, fingers are crossed for the passage of GST and RERA bills.
Mr. Rakesh Yadav, Chairman, Antriksh India
This budget has failed to impress the realty sector much with the government unable to satisfy the chief demands. Good news from the REITs and affordable housing perspective has been received, which clearly indicates the government’s push towards Housing for All initiative. Last year we saw a dampner from the government by way of increased service tax and later, Swachh Bharat Cess and this time also 0.5 percent of Krishi Kalyan Cess will add to the burden on the customers. But with rental tax exemptions, we are analysing the demand for low cost properties to increase for end use as well as returns perspective by another 5-7 percent in the next couple of years.
Mr. Ankit Aggarwal, CMD, Devika Group
We were hoping for much better decisions in this Budget as huge announcements by way of Smart Cities and AMRUT were made and this sector being a prime contributor towards the Indian GDP and employment generation deserved a better treatment. Announcements for affordable and rental housing alone will not suffice the purpose of this sector’s growth and it is crucial to understand the existing problems pertaining in the sector such as high interest rates that the developers suffer while borrowing funds and unable to deliver projects on time due to absence of a single window platform for the approval system.
Mr. Sudeep Agrawal, MD, Shri Group
India at present is suffering from a major shortfall of affordable housing and it is good to see that the government has introduced incentives for the developers and customers in this context. This budget will act as a perfect catalyst for propelling the demand for low cost housing and will also assist in the uprising of tier 2, 3 and 4 real estate markets. The burden of income tax has been indirectly reduced by increasing the ceiling on tax rebate by another Rs. 3,000 which will benefit almost 2 crore tax payers. Had the industry status and single window clearance been implemented, it would have been a complete budget for the real estate sector.
Mr. Rahul Chamola, MD, One Leaf Group
Major direct benefits for the sector have been received on the affordable housing and REITs part. This is of much significance for the sector as it is important to be in sync with the goals of the government and especially when the demand for affordable housing is present in the country. It would have been better if allied industries would have got something good out of the budget as realty sector is heavily dependent upon steel, cement, labour, sand, bricks, mortar and other such important raw materials. Industry status has been a long pending demand now which should have been addressed as any decrease in the cost of borrowings for the developers, directly leads to low cost of units for the customers.
Mr. Sushant Muttreja, CMD, Cosmic Group
Few moves by the government in the budget are highly welcomed considering the importance of low budget housing in the country and emergence of youth interest towards the real estate sector. A major segment of our population is residing on rent and with metros costing high on their pockets; it is a great move by the government to allow higher deduction by another Rs. 36,000 under Section 80(G). On the flipside, the budget has missed out on the key demands of this sector, but with the Budget session still a long way from the end, all eyes are now fixed upon RERA and GST bills where the government is showing keen interest of its passage.
Mr. Vikas Khurana, Co-Founder, HomzCart
Mission Housing for All by 2022 will receive a boost from the budget announcements, where both, developers and customers are to receive the benefits. Tier 2, 3 and 4 cities are now sure to come on the forefront with the scope of development being high, coupled with strong infrastructure boost by way of Rs. 97,000 crore. RERA bill should now be the prime aim of the government for this Budget Session as long term vision with growth will be supported by it. REITs will now become an integral part of Indian real estate as the DDT has been finally removed. Single window clearance and industry status not being implemented in this Budget will go down as the biggest misses, but with the increased focus on the affordable housing segment, a major chunk of our population will be able to look towards real estate as an option for end use and even for investment purposes.
Mr. Vikas Sahani, CMD, Property Guru
Real estate sector contributes 5-6 percent annually towards the Indian GDP and accounts as being one of the largest employment generators towards the sector. Tax slabs and savings cap has remained unchanged but ceiling on tax rebate increased. We might be cheering upon the fact that affordable housing segment has received major incentives, which is correct to some extent; but where is the single window clearance system which will promote on time delivery of the projects. Without timely approvals, it will be near impossible for the developers to deliver in 3 years to reap the benefits. Also, if industry status would have been granted then the end cost of units in general would have reduced, thus automatically making several properties nationwide affordable.
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