Union Budget 2022: Are there any long-term benefits for home buyers and developers?
While the immediate demands of home buyers and the industry were largely ignored in Budget 2022, we gauge the markets’ reaction to understand if there are any long-term positives
You are reading: Union Budget 2022: Latest updates
Budget 2022: Real estate industry left wanting more
Although the real estate sector received a push in the Union Budget 2022-23, in terms of affordable housing, the industry’s hopes that tax incentives would facilitate the recovery of the segment, remained unfulfilled
Union Budget 2022-23: Government banks on infrastructure development to boost economic growth
As many industry experts had anticipated, infrastructure push remained one of the focus areas for the government this year. Key announcements were made during the budget, to bolster major infrastructure projects and build employment potential, to promote economic growth in the country.
Union Budget 2022-23 at a glance
Budget 2022-23: Highlights of FM Nirmala Sitharaman’s speech
FM concludes her Budget speech and tables the budget in the Parliament
FM leaves Income Tax slabs and rates unchanged.
Tax payers to be able to file updated tax returns to correct errors, within 2 years from the assessment year.
At present cooperatives need to pay 18% minimum alternate tax which is being reduced to 15%, at par with companies, to provide a level playing field.
Corporate surchage reduced from 15% to 7%
Surcharge on transfer of long-term capital gains tax capped at 15%.
Transfer of virtual digital assets to be taxed at 30%.
Tax deduction limit increased to 14% on employer contribution for NPS scheme for state govt employees.
Fiscal deficit for FY 2021-22 is estimated at 6.9% of GDP and for 2022-23 it is projected at 6.4% of GDP.
Capital expenditure outlay to be increased from 5.54 lakh crores to 7.5 lakh crores in 2022-23, up by 35.4%.
SEZ Act to be replaced with new regulation that will enable states to become partners.
5G spectrum auction to be held in 2022 to improve digital connectivity in urban and rural areas.
Introduction of digital rupee using blockchain to be done by RBI starting 2022-23.
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“The Budget made several announcements to spur growth of the logistics sector in the country. The Budget announced that about 25,000 km of new highways will be built this year. Moreover, Gati Shakti Masterplan for expressways,100 new cargo terminals for multi-nodal logistics, and development of urban metro systems will give a big boost to new warehousing and logistics facilities across the country. The government also extended the ECLGS up to March 2023. This will go a long way in supporting the MSME sector and revive industrial activity. This has immense scope to drive demand for warehousing and logistic sectors. The government repealed about 1,490 union laws, paving the way to enhance ease of doing business. The government also plans to launch ‘Ease of Doing Business 2.0.’ This should include more dynamic aspects and make India a more investment friendly destination.”
– Ramesh Nair, CEO, India & Managing Director, Market Development, Asia, Colliers
Cities will need to be reimagined to promote sustainable growth. High level committee to be formed with experts, to formulate policies on urban capacity building – town planning schemes and transit oriented development schemes will be implemented.
States to be encouraged to use unique land parcel identification number.
Housing projects allocated Rs 48,000 crore for FY 23 under PM housing scheme. 80 lakh houses to be completed under PMAY (Urban and Rural).
“Announcements such as 48,000 crores for PMAY, 80 lakh homes under PMAY, single window environmental approvals, better co-ordination between the centre and states for approval processes and uniform registration of deeds will help boost the affordable housing market.”
– Ramesh Nair, CEO, India & Managing Director, Market Development, Asia, Colliers
New scheme for the development for North-East states to be launched.
Har ghar nal se jal – allocation of Rs 60,000 crore, with the aim to to cover 3.8 crore households in 2022-23
Ken-Betwa link project at over Rs 44,605-crores will be taken up – to provide irrigation benefits to 9 lakh hectares of farmland, drinking water to 62 lakh people, 103 MW hydropower, and 27 MW solar power generation.
Draft DPRs for 5 river interlinking projects (Damanganga-Pinjal, Par- Tapi-Narmada, Godavari-Krishna, Krishna-Pennar, and Pennar-Kaveri) have been finalised. Once consensus is reached among beneficiary states, centre will provide support for implementation:
Design of metro rail structures will be standardised.
Rs 20,000 crore will be mobilised to enhance public resources.
Contracts for the implementation of multi-modal logistics parks at 4 locations will be awarded in 2022-23, under the PPP mode
Under the PM’s Gati Shakti programme, the national highways network to be expanded by 25,000 kms in FY23.
PM Gati Shakti Master Plan for Expressways to be formulated in 2022-23, to facilitate faster movement of people and goods. The PM Gati Shakti programme will be driven by 7 engines: roads, railways, airports, ports, mass transport, waterways, logistics infra
100 cargo terminals to be set up under PM Gati Shakti over 3 years.
400 new-generation Vande Bharat trains will be developed.
National Ropeway development program in PPP model to promote tourism and easy transport in hilly areas. Contracts to 8 vendors will be awarded for a length of 60 km in 2022-23.
The ECLGS (Emergency Credit Line Guarantee Scheme) will be extended till March 2023.
We aim to achieve growth through: Macroeconomic growth focus + microeconomic welfare focus, Promoting digital economy, FinTech, Tech enabled development, Energy Transition, and Climate Action
The ‘Make in India’ initiative to create 6 million jobs: Sitharaman
The National Bank for Infrastructure Development, andd the National Asset Reconstruction Company have commenced activities, says the FM
This budget aims to provide a blueprint for the next 25 years, for India @100: FM
India’s growth estimated to be 9.2% this year, and the nation is in a strong position to withstand challenges, says FM.
FM Nirmala Sitharaman begins presenting the Union Budget 2022-23
Union Budget 2022-23 Nirmala Sitharaman speech pdf
Budget 2022: Infra, election states could be key focus areas
Budget 2022, which will be finance minister Nirmala Sitharaman’s fourth union budget, could provide a higher allocation for infrastructure, such as roads, railways and water, to boost the economy. The upcoming assembly elections in Uttar Pradesh and 4 other states, could also mean greater focus on the rural economy and agriculture.
The Finance Ministry, meanwhile, has said that the budget will be an ‘inclusive’ one.
FM calls on president before presenting union budget
Finance minister Nirmala Sitharaman, along with senior officials of the Ministry, call on President Ram Nath Kovind, before presenting Budget 2022-23 in Parliament. (Source: PIB)
Stock markets open higher on Budget day
The BSE and the NSE have opened higher on February 1, 2022, trading over 1% up, ahead of the finance minister’s budget presentation at 11 am. Realty indices too have been trading in line with the overall markets.
January 31, 2022
Indian economy: A snapshot of key parameters
‘Economic Survey infuses optimism for what lies ahead’
CEO, India and managing director, market development, Asia, Colliers
“The 2022 Economic Survey infuses optimism for what lies ahead. The projection of 8%-8.5% GDP growth for fiscal 2022-23 will be led by supply-side reforms and easing of regulations. The survey also indicates that consumption is growing and inching closer to the pre-pandemic levels. Total consumption is estimated to have grown by 7.0% in 2021-22 with a significant boost from government spending. The Survey spells out that rising capital expenditure by the government on infrastructure and an uptick in the housing cycle has been responsible for reviving the construction sector. This has resulted in the consumption and production of steel and cement consumption to reach pre-Covid levels. We expect Budget 2022-2023 to announce reforms and incentives that will continue to boost consumer spending and thus aid in the overall revival of the real estate sector”
Indian economy well placed to take on the challenges of the next fiscal year: Economic Survey 2021-22
The Economic Survey 2021-22, which was tabled by the Union Minister for Finance & Corporate Affairs, Nirmala Sitharaman, on January 31, 2022, in Parliament, stated that the Indian economy is estimated to grow by 9.2 per cent in real terms in 2021-22, after a contraction of 7.3 per cent in 2020-21. This implies that overall economic activity has recovered past the pre-pandemic levels. Almost all indicators show that the economic impact of the ‘second wave’ in Q1 was much smaller than that experienced during the full lockdown phase in 2020-21, even though the health impact was more severe.
According to Survey, the industrial sector went through a sharp rebound from a contraction of 7 per cent in 2020-21 to an expansion of 11.8 per cent in this financial year. The manufacturing, construction and mining sub-sectors went through the same swing although the utilities segment experienced a more muted cycle as basic services such as electricity and water supply were maintained even at the height of the national lockdown. The share of industry in GVA is now estimated at 28.2 per cent.
The Survey states that the services sector has been the hardest hit by the pandemic, especially segments that involve human contact. This sector is estimated to grow by 8.2 per cent this financial year following last year’s 8.4 per cent contraction. It should be noted that there is a wide dispersion of performance by different sub-sectors.
Both the finance /Real Estate and the Public Administration segments are now well above pre-COVID levels. However, segments like Travel, Trade and hotels are yet to fully recover. There has been a boom in software and IT-enabled services exports even as earnings from tourism have declined sharply.
Pointing to the good health of the banking system, the Survey said sid that banks were well capitalised and NPAs seemed to have structurally declined. The Gross Non-Performing Advances (GNPA) ratio (i.e. GNPAs as a percentage of Gross Advances) and Net Non-Performing Advances (NNPA) ratio of Scheduled Commercial banks (SCBs) continued to decline since 2018-19. GNPA ratio of SCBs decreased from 7.5 per cent at end-September 2020 to 6.9 per cent at end-September 2021.
Overall, the survey painted an optimistic picture, saying that macro-economic stability indicators suggest that the Indian economy is well placed to take on the challenges of 2022-23 and one of the reasons that the Indian economy is in good position is its unique response strategy.
CEO, Savills India
“At a time when the economy is anxious about recovery due to the Omicron threat, we look forward to a positive approach from the Budget. In addition to agriculture, the focus is likely to be maintained on manufacturing, infrastructure and real estate sector in the budget. On the wish list, will once again be infrastructure status for real estate sector. It has the potential to unlock a host of benefits for boosting foreign, as well domestic investment. Reduction in GST rates of key construction material, extension of credit linked subsidy scheme (CLSS) and enhancement in interest deduction limits on housing loans are also highly desirable. Introduction of alternative asset classes in REITs could fundamentally increase both, retail and investor participation, in the real estate sector. A benevolent approach towards the financially depleted demand side through additional tax deductions will be welcome too. The country is poised for growth in life sciences R&D. A special policy focus on this, aimed at attracting investment in R&D real estate will provide a great platform for future. All these will go a long way in attracting investment, accelerating demand and supporting a higher growth trajectory.”
Budget 2022: Expectations of the real estate sector and challenges ahead
Prima facie, the industry narrative ahead of the Budget 2022 is more balanced to accommodate the concerns of all the stakeholders. As a result, demands like the industry status, single-window clearance, ease of project finance, etc., are not as loud as in previous years. Instead, there is a desire to see an increase in the limit of tax deduction given to home loan borrowers to Rs 5 lakhs. Demands are also being made to change the definition of affordable housing, reduce the long-term capital gains tax to encourage more investment and making new provisions for rental housing schemes.
February 1, 2021
Budget 2021: Government extends affordable housing tax holiday, deductions under Section 80EEA for another year
Finance minister Nirmala Sitharaman has proposed to extend the benefits of Section 80EEA and the tax holiday for developers of affordable housing projects, till March 31, 2022, in her Budget for 2021-22
Budget 2021: Industry welcomes expansionary budget, hails pragmatic approach
While the real estate industry may have been expecting more from Budget 2021, stakeholders have, nevertheless, welcomed the finance minister’s various announcements, terming it as a pragmatic budget 2021
Budget 2021: FM gives a boost to infrastructure development
Here is a detailed look at the finance minister’s announcements related to the infrastructure sector, in Union Budget 2021-22
PMAY-U: Affordable rental housing in India gets a boost in Budget 2021
The Budget 2021-22 has given a boost to affordable rental housing in India, with finance minister (FM) Nirmala Sitharaman proposing to allow tax exemption for notified affordable rental housing projects.
Budget 2021: FM announces Rs 2,217-crore funding to battle air pollution
Finance minister Nirmala Sitharaman has announced a substantial increase in funding to tackle air pollution in Indian cities, as well as for the Swachh Bharat and Jal Jeevan mission, in the Union Budget 2021-22
FM Sitharaman rolls out schemes to benefit construction workers in Budget 2021
We look at some of the measures that finance minister Nirmala Sitharaman announced in the Union Budget 2021-22 that are likely to benefit labourers in the construction industry.
Markets react positively to Budget 2021
Real estate stocks have responded positively to the budget, with the BSE Realty and Nifty Realty indices up by 6.65% and 6.31%, respectively, in intra-day trading.
Union Budget 2021-22: Highlights
FM Nirmala Sitharaman tables the Union Budget 2021-22 in the Lok Sabha
Affordable and rental housing
- Additional deduction of Rs 1.5 lakhs for affordable housing under Section 80EEA extended for one more year till March 31, 2022.
- Tax exemption to be given for notified rental housing schemes.
Propose to make dividend payments to REIT (Real estate investment trusts) and InvIT (Infrastructure investment trusts) exempt from TDS, says FM.
Senior citizens of 75 years or older, with only pension and interest income, to be exempt from filing income tax returns (ITR).
Faceless national Income Tax Appellate Tribunal centre to be established. Dispute resolution panel to be set up for small tax payers.
“The Government’s focus on restarting economy is clear in its commitment to the time-tested Keynesian principle of spurring infrastructure to create jobs and channelize economy multiplier cycles. With a 5.4 lakh cr budget, there is huge focus on strengthening infrastructure through industrial corridors, highways, BRT, railways, ports and power especially with the highest ever allocation to MORTH. And this promise comes with attention to detail such as a focus on PPP, special schemes for faster resolution of disputes, and a clear intention to augment infra-financing sources such as Debt-Financing institutional support which has a clear target of creating a lending portfolio of over 5 lakh cr in 3 years; and a thought-through specified Asset Monetisation (especially surplus non-core land with corporations) and Strategic Disinvestment plan. Parallel to infra impetus; Govt’s focus on Atmanirbharta through Performance-linked incentives, mega textile parks and an enhanced National Infra Pipeline of 7400 projects, is expected to fuel the industrial propulsion that is the clear hallmark of this budget. It’s remarkable that the Govt has also set aside incentives and measures on the private side of public infrastructure through its 3+ lakh cr scheme for discoms and subsidy to Indian shipping companies in global tenders. Overall, the budget has a positive, expansionary outlook towards economy, and builds on the trend towards performance-based incentives started by this Government in 2014, which is again reflected in incentives for capital projects with a positive progress (44000 cr to DEA) and strengthening PLI in manufacturing.” – Vivek Agarwal, Partner, Infrastructure, Government and Healthcare Practice, KPMG in India
“The proposed debt financing for REITs and InvITs (through a suitable amendment) is expected to provide a major fillip and will attract more investments for the sector.” – Chintan Patel, Partner and Head, Building Construction and Real Estate, KPMG in India.
Fiscal deficit in 2021-22 expected to be 6.8% of GDP. In 2020-21, the fiscal deficit is pegged at 9.5% of GDP.
Rs 40,000 crores to be allocated towards rural infrastructure development fund.
Special purpose vehicle (SPV) to be set up, to monetise idle assets including government land. National Monetisation Pipeline of potential brownfield infrastructure assets will be launched, to monetise operating public infrastructure assets.
To deal with NPAs, an asset reconstruction company and asset management company will be set up, to take over stressed assets. Rs 20,000 crores to be provided for recapitalisation of government banks.
“Social security framework extended to construction labour. The social security under BOCW cess is already existing. Implementation in most of states was done by having proper framework. This new announcement of including construction workers under welfare extended to migrant labours needs to be studied further on how different it is from existing scheme”. – Jatin Shah, national director at Colliers International India.
Kochi Metro, Chennai Metro, Bengaluru Metro, Nagpur Metro and Nashik Metro get a boost in Budget 2021.
Centre to provide Rs 18,000 crores for a new scheme to augment bus transport services in urban areas.
Capital expenditure allocation for 2021-22 to be 5.54 lakh crores.
– Over Rs 2 lakh crores for states and autonomous bodies for capex. Rs 40,000 crores allocated for programmes, departments and projects that show good progress in capex and which may be in need of further funds.
Railways gets Rs 1,10,055-crore outlay.
The Western Dedicated Freight Corridor and Eastern Dedicated Freight Corridor are expected to be commissioned by June 2022.
Highways: 3,500-km corridor in Tamil Nadu, 1,100 kms in Kerala at investment of Rs 65,000 crores, 675 kms in West Bengal for Rs 95,000 crores and 1,300 kms in Assam announced by the FM
New economic corridors are being planned, to boost road infrastructure.
Over Rs 1,18,000 crores allocated for the Ministry of Roads.
Government aims to complete 11,000 kms of national highway infrastructure this year: FM
West Bengal gets Rs 25,000 crores for road projects.
A professionally-managed Development Financial Institution will be set up, to provide, enable and catalyse infrastructure financing. Rs 20,000 crores to be allocated, to capitalise this institution. The aim is to have a lending portfolio of at least Rs 5 lakh crores in 3 years: FM
217 projects worth over Rs 1 lakh crores completed under National Infrastructure Pipeline: FM
“The proposed easing of InvITs/REITs will be massively positive in getting new REITs going and attracting fresh investments in Real Estate”. – Gagan Randev, National Director, Capital Markets & Investment Services, Colliers International.
Rs 35,000 crores to be spent on COVID vaccines in 2021-22.
Outlay of Rs 2.87 lakh crores for Jal Jeevan Mission.
Rs 2,217 crore outlay for 42 urban centers with a population of over one million, to tackle air pollution.
The urban Swacch Bharat Mission 2.0 will be implemented with an investment of Rs 1,41,678 crores over 5 years, from 2021: FM
Rs 64,180 crores will be invested over six years, to improve primary, secondary and tertiary healthcare. This will be in addition to the National Health Mission.
The Atmanirbhar packages announced by the government accelerated structural reforms. The total estimate of all relief measures announced by the government and the RBI so far is Rs 27.1 lakh crores (13% of GDP): FM
Budget 2021 proposals rest on 6 pillars:
- Health and Well-Being
- Physical and Financial capital and infrastructure
- Inclusive Development for Aspirational India
- Reinvigorating Human Capital
- Innovation and R&D
- Minimum Govternment, Maximum Governance
FM begins her budget speech by referring to the COVID-19 pandemic and its ‘unprecedented’ impact on the economy. “The risk of not having a lockdown was far greater than having one,” she says.
This is the first ever ‘digital’ budget presented by the government.
FM Nirmala Sitharaman begins presenting the Union Budget 2021-22
Text of finance minister Nirmala Sitharaman’s Union Budget 2021-22 speech
Finance minister Nirmala Sitharaman will present the Union Budget for 2021-22 in Parliament today at 11 AM, amid high hopes of a major government push towards restarting the economy that has been battered by the COVID-19 pandemic.
The union minister for finance and corporate affairs, Nirmala Sitharaman departs from North Block to Rashtrapati Bhavan and Parliament House, along with the minister of state for finance and corporate affairs, Anurag Singh Thakur and senior officials, to present the General Budget 2021-22, in New Delhi on February 01, 2021.
Stock markets open on a cautious note
The BSE Realty and Nifty Realty indices have opened almost flat, up by 0.18% and 0.15%, respectively.
GST collection almost touches Rs 1.2 lakh crores, highest ever
In some good news for the government ahead of the Union Budget 2021, the gross Goods and Services Tax (GST) revenue collected in the month of January 2021, as of 6PM on January 31, stood at Rs 1,19,847 crores. This is in line with the recovery trend witnessed over the past five months. “The revenues for the month of January 2021 were 8% higher than the GST revenues in the same month last year. The GST revenues during January 2021 are the highest since introduction of GST and has almost touched the Rs 1.2 lakh-crore mark, exceeding the last month’s (December 2020) record collection of Rs 1.15 lakh crores. GST revenues above Rs 1 lakh crore for a stretch of the last four months and a steep increasing trend over this period, are clear indicators of rapid economic recovery, post-pandemic,” the government said, in a release.
Access to quality housing in India has improved: Economic Survey 2020-21
The government’s Economic Survey 2021 shows that there has been a marked improvement in access to quality housing in India, especially for the people belonging to the low income group (LIG) segment. Citing trends from the National Housing Index, the survey, presented by finance minister Nirmala Sitharaman, on January 29, 2021, ahead of the Union Budget on February 1, however, noted that the improvement in access to housing had been disproportionately better for the low income group (LIG), as compared to the high income group (HIG) segment, thereby, enhancing equity in access to housing in 2018, vis-à-vis 2012.
The survey also projected that the economy was likely to grow by a robust 11% in FY22 on the back of the roll-out of a massive vaccination drive. After experiencing a sharp contraction of 23.9% in the first quarter of 2020-21, India is expected to be the fastest-growing economy in the next two years, it added.
Image source: PIB
January 31, 2021
Budget 2021 expectations: Home loan and tax benefits that can help property owners and buyers
What can the finance minister do, in Budget 2021, to make it easier for prospective buyers and those who have already made the purchase, to own properties? We examine…
Budget 2021: What do home buyers and tax payers expect?
What are the benefits that finance minister Nirmala Sitharaman can offer to home buyers and tax payers in Budget 2021? We examine
Hoping for sweeteners amid a bitter pandemic
The union minister for Finance and Corporate Affairs, Nirmala Sitharaman at the ‘halwa ceremony’, to mark the final stage of the budget-making process for Union Budget 2021-22, in New Delhi on January 23, 2021. The minister of state for Finance and Corporate Affairs, Anurag Singh Thakur and other dignitaries are also seen.
Budget expectations – Knight Frank India
Chairman and managing director, Knight Frank India
On the aspect of housing demand, Section 80 C tax deduction on home loan principal repayment does not provide for a focused benefit on housing. A separate annual deduction of Rs 1,50,000 will provide the much-needed fillip to opt for house purchase. The credit-linked subsidy scheme (CLSS) has ensured a remarkable increase in the activity level in the affordable housing sector. Given the disturbances owing to the COVID-19 pandemic and a likely two-year time frame for the economy to recover from the impact, the deadline for the CLSS should be extended by two years, up to March 31, 2023. Additionally, given the relatively higher house prices in major cities, the upfront amount of the CLSS subsidy should be increased to Rs 3.5 lakhs (from the current level of Rs 2.3-2.67 lakhs, depending on the income category) with a corresponding enhancement in income criteria, which shall make the subsidy amount more significant in comparison to the house value.
The stressed asset fund to revive stuck residential projects has been progressing well. Considering there is a well-developed mechanism to prevent misuse and ensure timely completion of projects with proper supervision in this fund, government should consider increasing the size of the fund. With increased financial support, the fund can also be encouraged to lend to a wider bouquet of projects till the NBFC sector gets back on its feet. To avoid a cascading impact of taxes and consequently house prices, the government should use this budget session to refer recommendation on restoration of GST input tax credit, to the GST Council.
For REIT, the government should reduce the timelines of investment from three years to one year for long-term capital gains taxation, thereby, ensuring larger retail investor participation and easing a long-term funding challenge for such projects.
What does the commercial real estate segment expect from Budget 2021?
ecis2016.org News speaks to some prominent developers and consultants from the commercial realty segment, to understand their expectations and demand from Budget 2021
Budget expectations – Brigade Group
Executive director, Brigade Enterprises Ltd
Cement, which is a vital raw material for infrastructure and real-estate, currently attracts GST of 28%, which is the rate at which luxury items are taxed. A reduction in GST for cement would be a welcome announcement for the sector.
It would be helpful if the government categorises affordable housing ticket sizes defining urban affordable housing in line with the RBI and other institutions which is at Rs 65 lakhs. Also, an extension on the timeframe, to around seven years, for completion of affordable houses which is currently at five years from the date of sanction, will give added impetus to developers.
Subrata KC Sharma
COO – commercial, Brigade Enterprises Ltd
We urge the FM to consider extending ‘infrastructure’ status to commercial developments and allow GST input credit and tax benefits for data centre developments, keeping in view the opportunities and requirements.
Executive director and CEO, Brigade Hospitality
The hospitality and tourism sectors have been the worst hit during this pandemic and truly deserve to be resuscitated with government’s support. Some of the additional measures that we urge our finance minister to consider are – a waiver or reduction of interest on loans for the lockdown period; Emergency Credit Line Guarantee Scheme (ECLGS) though welcome, should have working capital loans with reduced rates of interest; drastic reduction in GST rates for hotels and restaurants for 2021-22 to help boost travel and tourism; MV Act notification on ‘One Nation One permit’ to be expedited to help boost inter-state movement of tourist vehicles; impress upon respective state governments to refund part of license fees and duties for the lockdown period – this includes Property Taxes, liquor licenses, etc. and accord industry status to the hospitality sector.
FM holds bre-budget consultations
Union finance minister Nirmala Sitharaman chairing the pre-budget consultations with the finance ministers of all states and union territories (with legislature), via video-conferencing, in New Delhi on January 18, 2021.
Budget 2021: Can the FM announce policy changes to please developers and home buyers?
We examine the concerns of the builders and property buyers ahead of Budget 2021 and whether the macro-economic concerns that the finance minister has to deal with, will allow for any sops for real estate
Budget expectations – CREDAI , West Bengal
Chairman, Merlin Group and president, CREDAI , West Bengal
With Indian economy poised for a big leap in the next 10 years and most of the leading rating agencies predicting a near double digit growth from 2022-23, there is a need to bolster the real estate sector that contributes 8% of the country’s economy. There is a requirement of both, demand-side and supply-side stimulus, for the sector which was hit hard by the pandemic.
- Hike the rebate of Rs 2 lakhs tax on housing loan interest rates under Section 24 of the Income Tax Act to at least Rs 5 lakhs to generate healthier housing demand, most notably in affordable and mid-segment housing.
- Personal tax relief, either by tax rate reductions or amended tax slabs – The last increase in the deduction limit under Section 80C (to Rs 1.5 lakh a year) was in 2014 and an upward revision is long overdue.
- The interest subsidy for affordable housing under Pradhan Mantri Awas Yojana can be extended further for 3 years.
- Even a limited period waiver of GST will reduce overall property cost and thus push demand for under-construction homes.
- The GST rate on composite supply of works contract for residential real estate should be reduced to 5% with Input Tax Credit benefit. In the absence of ITC, 12% GST on works contracts is quite prohibitive and takes the cost of a residential unit beyond the reach of a common citizen.
- High GST rates on inputs for residential real estate is quite prohibitive. Accordingly, either GST rate on these goods may be reduced to 12% or residential real estate projects may be allowed refund of ITC in the form of ‘inverted duty structure’, together with refund of input services as well.
- ITC on Slum Rehabilitation Projects: At present GST becomes chargeable on land plus construction cost of units, even when there is absence of any transfer of land. Slum Rehabilitation Projects should be considered as construction service to society members / tenants / land owner and be charged at full rate of tax only on cost of construction and not land.
- Cancellation/ surrender/ change of unit: The present provision on adjustment of GST in case of cancellation/ surrender/ change of unit by a buyer is not very clear. It is generally understood that such adjustment can only be done till filing of GST return for the month of September next year. A suitable amendment in the law should be made, permitting adjustment of GST paid, in Section 34 of the CGST Act, permitting the adjustment of GST paid beyond 30th September of the last fiscal.
- 9 No GST for Rental Housing Development: The government should come out with a policy for waiver of GST for projects which are built as rental housing stock, provided such developed housing stock must be used as rental housing for at least 5 years from the date of completion.
- CLSS subsidy: The government has already extended the deadline for the PMAY’s Credit Linked Subsidy Scheme (CLSS) for the MIG category till March 2021. This subsidy can be further extended by another year till March 2022.
- Infrastructure status: The real estate sector should be accorded infrastructure status and included in the priority lending list of banks.
- More incentives for private sector investments in affordable housing: Despite the benefit of infrastructure status for this critically important segment, developers are unable to get funding from major banks and NBFCs at affordable cost. The profit margins for affordable housing projects continue to be extremely low.
- Easing liquidity: Project delays – the biggest fallout of the cash crunch – had severely dampened buyer sentiments in the last two years. Developers need a rational capital flow to keep up the supply pipeline, especially for ready-to-move-in homes, which are in highest demand. Healthy increased supply also helps to keep property prices range-bound.
Budget 2021: Real estate industry seeks tax rationalisation to boost demand
We look at what the real estate industry is expecting from the Union Budget 2021, which is due to be announced on February 1, 2021
Budget expectations – Ashwin Sheth Group
Director, Ashwin Sheth Group
The real estate sector faced multiple challenges due to reverse migration, stoppage of work, travel restrictions and less disposable income with potential buyers. However, the recovery has been a positive one, with profitable sales growth in the residential front due to the festive season, attractive schemes and the consumers’ assertive outlook to restart looking for homes. Moreover, government reforms like reduction in stamp duty, the extension of the project completion deadline, RBI Monetary Policy Committee’s decision to extend the co-lending scheme for NBFCs and HFCs, led the industry on the path of recovery. We are optimistic about the amendments and wish the budget addresses some of the critical issues, such as:
- Speeding up infrastructure development to improve connectivity to various emerging micro-markets.
- GST waiver on under-construction projects.
- Ease in the cash flow and capital generation options that will support the developers to complete the construction work in time.
Budget expectations – Ambuja Neotia Group
Chairman, Ambuja Neotia Group
Budget for 2021 will be particularly important, coming immediately after the pandemic-induced poor performance of the economy in the year 2020-21. It is hoped that the soft interest rate regime would continue and the government would focus on speeding-up investment in infrastructure. To contain the fiscal deficit, we hope that an aggressive disinvestment plan will be taken up. The momentum generated on efforts made for ease of doing business and reforms in general will continue. Robust GST collection in the month of December 2020 indicates both, a pick-up in the economy, as well as better compliance. Keeping up this momentum is, therefore, very important.
February 1, 2020
Budget 2020: What did the real estate sector gain?
ecis2016.org News speaks to some real estate experts and developers, to understand their views on the Budget 2020 and how it will impact the residential realty sector
Budget 2020: Tax benefits for home buyers
Here are some of the top announcements made in Budget 2020-21 that can bring tax relief for home buyers and developers of affordable housing as well.
Union Budget 2020-21: Main highlights for real estate and tax payers
In a budget unveiled among a slowing economy, finance minister Nirmala Sitharaman focused on the rural and infrastructure sectors. Click here to know the key takeaways for home buyers and developers.
Image source: PIB
Stock markets tank following Budget 2020
Housing News Desk
Stock markets fell sharply following the announcement of the Union Budget 2020-21. The BSE Realty index fell by 197.5 points, down 7.82%, while the NSE’s Nifty Realty closed lower by over 26 points, down 7.87%.
Union Budget 2020-21: Highlights
FM Nirmala Sitharaman tables the Union Budget 2020-21 in the Parliament. This was the longest budget speech by a finance minister.
“Affordable housing continues to be the focus of the current government evident from extension of deduction and tax holiday for developers. The announcement has tackled both demand and supply side, which is expected to encourage further development of affordable housing.” – Megha Maan, Senior Associate Director, Research at Colliers International India.
* Rs 1.5 lakh additional waiver on interest for affordable housing loans, to be extended by a year.
* Tax holiday provided to developers of affordable housing to be extended by a year.
“The tax structure will provide more income in the middle class which could lead to increased consumption in the residential sector.” – Argenio Antao, COO at Colliers International India.
* The new personal income tax regime is optional for tax payers and will depend on the exemptions and deductions being availed of under the old regime.
* A person earning Rs 15 lakhs per anum and not availing of any deductions will now pay Rs 1.95 lakhs tax in place of Rs 2.73 lakhs: FM
* Simplified regime for individual tax payers:
- No tax up to Rs 5 lakhs
- 10% tax for Rs 5-7.5 lakhs (20% at present)
- 15% tax for Rs 7.5-10 lakhs (20% at present)
- 20% tax for Rs 10-12.5 lakhs (30% at present)
- 25% tax for Rs 12.5-15 lakhs (30% at present)
- 30% tax for income above Rs 15 lakhs
* We estimate a fiscal deficiti of 3.8% in 2019-20.
* All flagship schemes of the govt fully provided for.
* To boost startups, tax burden on employees due to tax on Employee Stock Options to be deferred by five years or till they leave the company or when they sell, whichever is earliest.
* Govt to sell part holding in LIC through IPO.
* International bullion exchange to come up at GIFT City, Gujarat.
* Rs 22,000 crore has already been provided as support to the infrastructure pipeline.
* Subordinate debt scheme proposed for entrepreneurs of MSMEs
* Insurance cover for a depositor to be raised from Rs 1 lakh to Rs 5 lakhs per depositor.
* Robust mechanism in place to monitor all scheduled commercial banks and depositors’ money is safe.
* A Tax payers charter to be introduced into the statute, to avoid harassment.
* Rs 4,400 crores allocates towards tackling air pollution.
* FM reiterates commitment to tackling climate change.
* Govt proposes 100% tax concession for sovereign wealth funds investing in infra projects.
* Rs 28,600 crores for women-related schemes.
* National mission for quantum technology – Rs 8,000 crores allocated for five years.
“Building data centre parks throughout country announced. All public institutions at gram panchayat with data connectivity will help setting up data centres across the country in a phased manner.” – Jatin Shah, National Director, Managing Director & Chairman- India Office, Colliers India.
* Govt to unveil policy for building data center parks throughout the country.
* Rs 1.7 lakh crores to be provided for transport infrastructure in 2020-21.
* Rs 27,300 crores for development and promotion of industry and commerce.
“Rs 3,000-crore allocation for skill development is good first step to make the massive Indian youth force more employable in the global context.” – Indranil Basu, Director, Project Management (South) at Colliers India.
* Rs 99,300 crores for education sector in 2020-21 and Rs 3,000 crores for skill development.
* Rs 22,000 crores for power and renewable energy sector in 2020-21.
* 100 more airports to be developbed by 2024, to support the UDAAN scheme.
* The Mumbai-Ahmedabad Bullet Train project will be actively pursued.
* The Delhi-Mumbai Expressway will by completed 2023. Chennai-Bengaluru highway also to be started.
* Govt will focus on 2,000 kms of strategic corridors and 9,000 kms of economics corridors.
“National Logistics Policy will boost investor confidence in the country’s most unorganized sector. Creating a single point of reference for all logistics and trade facilitation matters in the country, National logistics policy will also enhance India’s position in attracting investments and business competitiveness to facilitate the expansion of manufacturing units to tier-II and tier-III cities in the country to unlock demand potential of these regions. It will drive economic growth by promoting integrated development of logistics sector and creation of jobs and business opportunities.” – Sankey Prasad, Managing Director and Chairman at Colliers International India.
* National logistics policy to be released soon.
* National infrastructure pipeline of Rs 103 lakh crores launched.
* 5 new smart cities to be developed, in collaboration with states.
* Rs 3.60 lakh crores for Jal Jeevan mission already approved. Rs 11,500 crores for this scheme in 2020-21.
* Swachh Bharat to get Rs 12,300 crores in 2020-21.
* Urban local bodies to give internships to fresh engineers, for one year.
* Investment clearance cell to be set up at states and centre.
* We are proposing comprehensive measures for 100 water-stressed districts: FM
* Farmers with barren land will be helped to set up solar power installations and to sell the power to the grid.
* Govt to provide viability-gap funding to set up warehouses.
* FDI in India rises to $284 billion during 2014-19.
* Central govt debt has reduced from 52.2% in March 2014 to 48.7% in March 2019.
* FM says this Budget is woven around 3 prominent themes:
1. Aspirational India
2. Economic development for all
3. A caring society
* An average household saves around 4% of its monthly spends on account of GST: FM
* This budget aims to boost the people’s incomes and purchasing power: FM
FM Nirmala Sitharaman begins presenting the Union Budget 2020-21
‘Feel good’ Budget may see cut in tax rate, sops for social sectors
A cut in personal income tax, sops for rural and agriculture sectors, as well as an aggressive push on infrastructure spending are likely to be part of finance minister Nirmala Sitharaman’s ‘feel-good’ second budget. Facing the worst economic slowdown in more than a decade, Sitharaman is expected to pull out all stops to spur consumer demand and investment, government sources and economists said.
After corporate tax cuts in September 2019, speculation is rife about possible reduction in personal income taxes. A combination of an increase in the basic exemption limit and/or the introduction of a differentiated tax rate structure for higher incomes may be on the cards. To cushion the impact on collections, these tweaks might be accompanied by rationalisation in tax rebates.
“The government announced a slew of stimulus measures in the last four months but consumer confidence is missing. Not many are eager to take loans to buy homes or cars fearing the worst. The feel good factor in the economy is missing,” a senior government source said. “I think the Budget will be a feel-good Budget that will try to restore faith in the economy and spur spending and investments,” the source said.
Also, there would be announcements for sectors such as renewable energy, e-vehicle, power, affordable housing, real estate, and exports, they said. Financial markets are expecting relief on Securities Transaction Tax (STT), Long Term Capital Gains Tax (LTCG) and removal of dividend tax. Capital infusion in public sector banks and liquidity measures for Non-Banking Finance Companies (NBFC) may also be on the horizon.
Both, government sources and economists, felt the budget would reaffirm the focus on infrastructure spending after the rollout of an ambitious National Infra Pipeline (NIP) in December 2019. Social sector schemes such as rural electrification, MGNREGA, healthcare, education and skill training may also find mention in the budget.
However, all such measures would come at the cost of fiscal slippage.
The Union Minister for Finance and Corporate Affairs, Nirmala Sitharaman departs from North Block to Rashtrapati Bhavan and Parliament House, along with the Minister of State for Finance and Corporate Affairs, Shri Anurag Singh Thakur and the senior officials to present the General Budget 2019-20, in New Delhi on February 01, 2020.
Stock markets open on a cautiously positive note
Housing News Desk
The BSE Realty and Nifty Realty indices have opened on a marginally positive note, up by 1.2% and 1.3%, respectively.
Better to focus on growth than on fiscal deficit in current situation: CEA
Chief economic adviser KV Subramanian, on January 31, 2020, suggested that the government should focus on growth, rather than being rigid on fiscal deficit in times of slowing economy. The government can look at option of increasing market borrowing to fund higher expenditure by the government in 2020-21, he said adding that if need be, the government can resort to higher market borrowing this fiscal.
“So, we’ve delineated the overall stance that needs to be taken in times like this. India has been in such situations earlier as well. There’s always a delicate balance between spurring growth and keeping the fiscal (situation) in order,” Subramanian said. “The view that we have articulated is that it’s better at this point to lean on growth,” he said. It is time to focus on growth and, therefore, cutting expenditure is not an option, probably because at a time like this, growth needs to be taken care of, he added.
January 31, 2020
Economic Survey pegs growth at 5% in FY20 and 6%-6.5% in FY21
The Economic Survey 2019-20 has pegged India’s GDP at 5% for FY20 and at 6%-6.5% in FY21 and said that the fiscal deficit target for the current fiscal may need to be relaxed, to revive growth. Weak global growth impacting India, as well as an investment slowdown due to financial sector issues, had led to growth dropping to a decade low in the current fiscal, it said.
The pre-budget survey said for wealth to be distributed, it first has to be created and called for looking at wealth creators with respect. For boosting growth, it called for new ideas for manufacturing such as ‘assemble in India for the world’ which will create jobs. It also called for improving governance in public sector banks and the need for more disclosure of information to build trust.
To further make it easier to do business, the Survey called for removing the red tape at ports to promote exports, as well as measures for easing the start of business, register property, pay taxes and enforcing contracts.
Image source: PIB
Developers should reduce prices, to clear unsold inventory: Economic Survey 2020
“The real estate sector, and residential property in particular, has been reeling with issues of delayed project deliveries and stalled projects leading to a build-up of unsold inventory over the years. Housing prices have remained elevated, even though growth in prices has fallen sharply since Q1 of 2015-16 and remained muted since then. As at the end of December 2018, about 9.43 lakh units worth Rs 7.77 lakh crores, with 41 months of inventory, are stuck in various stages of the project cycle across top 8 cities. Existing unsold housing inventory can be cleared and the balance sheets of both bank/ non-bank lenders cleaned if the real estate developers are willing to take a ‘hair-cut’ by allowing the house-prices to drop,” the Survey said.
Chief economist and national director – research, Knight Frank India
The Eco survey has projected GDP growth of 6%-6.5% in FY21. This will require a strong boost to consumption, for the growth to pick up to these levels. Sharp pick up in investment growth looks difficult given the excess capacity in the manufacturing sector, poor health of the NBFC sector and high NPAs plaguing the banking sector. The Survey has correctly identified the weakening health of the NBFC sector and suggested a framework for policy makers to efficiently allocate liquidity enhancements in the sector. The more critical aspect would be increased budgetary allocation for infrastructure investment in the Union Budget for FY21.
President – ASSOCHAM and NAREDCO
ASSOCHAM welcomes the positive outlook of Economic Survey report, where in India’s economic growth is projected at 6% to 6.5% in the next financial year starting April 1, 2020. However, we strongly advocate that the central government needs to announce bolder policy and fiscal measures, to recover from the sharp economic downturn. The success of economic green shoots lies in connecting the right dots for economic prosperity in an immediate time frame. As India Inc appreciates the significant progress of the nation’s global rankings across various parameters, many more bridges need to be to build, for nullifying the economic gaps. Proactive measures should be undertaken to push India among the top 50 nations in ‘Ease of Doing Business’ and to make it a globally competitive market. We strongly recommend bold fiscal stimulus in labour intensive sectors, which shall have a domino effect on enhancing employment generation and GDP.
Obtaining construction permits in Delhi takes 4 months: Economic Survey 2019-20
Housing News Desk
“When compared to the best-in-class Hong Kong, which tops the World Bank rankings for ease of obtaining construction permits, it can be seen that Hong Kong takes just over two months to obtain a construction permit, while Delhi takes almost four months. Moreover, it takes 35 days to get water and sewer connection in Delhi,” the Economic Survey 2019-20 said. The Survey analysed the procedures, time and costs that businesses in Delhi have to undergo for building a factory/warehouse, including obtaining necessary licenses and permits, completing required notifications and inspections and obtaining utility connections.
However, India has considerably improved the process to obtain construction permits over the last five years. Compared to 2014, when it took approximately 186 days and 28.2% of the warehouse cost, in 2019 it takes 98-113.5 days and 2.8%-5.4% of the warehouse cost, the Survey added.
It takes nine procedures, at least 49 days, and 7.4%-8.1% of the property value to register one’s property in India. Moreover, the number of procedures, time and cost have increased over the last 10 years. Meanwhile, New Zealand has only two procedures and a minimal cost of 0.1% of the property value, the Survey pointed out.
Budget 2020: Changes in income tax laws that can help home buyers
We look at some suggestions, vis-à-vis income tax laws for individual tax payers that the finance minister can consider in the Union Budget for 2020-21, which can help property buyers and boost demand in the real estate sector.
Budget 2020: What does the Indian real estate sector want from the FM?
We examine the key demands of the real estate sector from finance minister Nirmala Sitharaman’s Union Budget for 2020-21.
Budget 2020: Reforms that could boost the real estate sector
We look at some initiatives and subsidies that the union government can consider introducing in Budget 2020, to give a much-needed impetus to the real estate sector at the start of a new decade.
CEO and country head, JLL India
Extension of the Sunset Clause of Special Economic Zones: The government had introduced a sunset clause for SEZs in 2016. According to the clause, only an SEZ unit that commences operations on or before March 31, 2020, shall be eligible for an income tax holiday. Considering the challenges faced by the real estate sector in the last couple of years, there is a need for the government to extend the date and provide the required relief to SEZ units and developers.
Reduction in holding period of REITs for long-term capital gains: The reduction in holding period from three years to one year while calculating long-term capital gains from REITs, will provide a level playing field with competing equity instruments.
Deduction of pre-EMI interest in the same year: Currently, pre-EMI interest (interest paid during the construction period) can be availed as a deduction only after the construction of the building is complete in 5 equal annual installments. However, home buyers have been adversely affected due to inordinate construction delays. In order to provide timely relief to home buyers, it is recommended to provide for the deduction in the same year of interest payment.
Time extension to claim 100% tax deduction on profits from affordable housing projects beyond March 2020 u/s 80IBA: Budget 2019 had extended the timeline for approval of such projects under Section 80IBA on or before March 31, 2020. An extension in the dateline will ensure continued interest of developers to construct affordable housing projects and help in achieving the “Housing for All” objective of the government.
Change in income tax slabs in line with Direct Tax Code: The ‘Direct Tax Code’ which will replace the existing Income Tax Act, 1961 aims to widen the tax base and rationalise the tax rates (individuals and corporates) to make it equitable and at par with international standards This will help in simplification of direct tax laws in India, by adopting global best practices. It will thus aid in the creation of a more ‘progressive’ tax structure.
Separate provision for deduction of ‘principal repayment’ on home loans: A separate provision allowing deduction of principal repayment (currently forming part of 80C deduction) will provide home buyers higher tax benefits towards the latter stage of the loan tenure.
Budget 2020: Why the FM needs to give more attention to commercial realty
We look at some measures that the government can announce for commercial realty in Budget 2020, which have the potential to lift the entire real estate sector from its present slowdown.
Home buyers’ wish-list for Budget 2020
With the Union Budget 2020-21 set to be presented on February 1, 2020, ecis2016.org News speaks to home buyers across the country, to gauge their expectations and the incentives that they would like to see.
Home buyers’ wish-list for Budget 2020
RBI governor calls for structural reforms to revive growth
Reserve Bank of India (RBI) governor Shaktikanta Das, on January 24, 2020, called for structural reforms and more fiscal measures, to revive consumption demand and the overall growth, saying monetary policy has its own limitations to achieve these objectives. The call comes before the Narendra Modi government, in its second term, is set to present the budget, at a time when the advance estimate of GDP has projected nominal growth plunging to a 48-year-low of 7.5% and real growth hitting an 11-year low of around 5%.
“Monetary policy has its own limits. Structural reforms and fiscal measures may have to be continued and further activated to provide a durable push to demand and boost growth,” Das said. Das also listed out some of the priority areas where structural reforms are necessary. He called for prioritising food processing industries, tourism, e-commerce and startups and also making the domestic economy a part of the global value chain. Hie statement has to be seen in the context of growth hitting a six-year low of 4.5% in the September quarter.
Vice-chairman and managing director, Sobha Limited
Affordable housing: While the government has been bullish about the affordable housing segment, the value limit of affordable housing at Rs 45 lakhs, is an obstacle for this segment. The affordable housing segment should be defined based on the area and not the price. This will help tap many mid-income home buyers looking to invest in a home. Similarly, the eligibility criteria under the section 80EEA for additional interest deduction of Rs. 1.50 lakhs on home loan borrowed up to March 31, 2020 – stamp value of the unit to be within Rs 45 lakhs and the tax payer should be a first-time home buyer and not own any other residential property as on the date of the sanction of home loan – cannot be applied across all projects or locations. Therefore, this price cap should be removed or should be up to Rs 75 lakhs, along with the removal of the two conditions for availing additional interest deduction.
Other tax benefits for home buyers and developers: To boost housing demand and the sector, the deduction on principal repayment of housing loan up to Rs 5 lakhs per annum should be considered for exemption, in addition to the current Rs 1.50 lakhs per annum under section 80C of the IT Act. In addition to this, the set-off limit in case of loss from ‘house property’, both rented and self-occupied, against any other head of income should be increased to Rs 5 lakhs. This will provide much-needed impetus to the home buyers. Further, it is suggested that 100% exemption on home loan interest instead of the current limit of Rs 2 lakhs should be considered. Similarly, the timeline for deduction should be extended. The current period for availing deduction is between April 1, 2016 and March 31, 2017, with a limit of Rs 50,000. Extension of the timeframe for availing loan, increasing the limit of deduction along with the maximum value of loan and value of the residential house for tax incentives are much-needed steps to encourage the first-time home buyers.
Rental housing: To augment rental housing, 100% interest on home loans should be allowed as a deduction for second and third homes, if they are rented for a period of nine months during the year, except self-occupied.
Capital gains: During the Interim Budget 2019, the government had proposed to increase the benefit of rollover of capital gains under section 54 of the Income Tax Act from investment in one residential house to two residential houses for a tax payer having capital gains up to Rs 2 crores. Extending such benefit to two homes under the capital gain arising on sale of any long-term capital asset (54F IT Act) will push the home buyers to purchase a second home for long-term investment.
Unsold inventory: While the government had announced a relief by proposing not to charge it under income tax for a period of 2 years from the end of the year in which certificate of completion is obtained, it should be excluded completely from income tax liability in the current scenario. Further, the real estate business should be covered under the72A of the IT Act for the benefit of carry forward and set-off accumulated loss and unabsorbed depreciation in Merger and Acquisition (M&A) transactions.
Budget will have ‘plan of action’ on economy: Javadekar
The government will unveil its ‘plan of action’ to boost the economy in the Union Budget, union minister Prakash Javadekar said, on January 22, 2020, asserting that economic fundamentals remain very strong. “From the Union Budget, you will get government’s plan of action. Our fundamentals are very strong. Therefore, nobody should create a pessimistic view about Indian economy,” the Information and Broadcasting minister said.
IMF lowers India growth estimate to 4.8% for 2019
The International Monetary Fund (IMF), on Janaury 20, 2020, lowered the growth estimate for India to 4.8% for 2019. The IMF said it expects growth to be 5.8% in 2020 and rise to 6.5% in 2021. India-born IMF chief economist Gita Gopinath said growth in India slowed sharply owing to stress in the non-bank financial sector and weak rural income growth.
Chairman and CEO – India, South-east Asia, Middle East and Africa, CBRE
The massive allocation of Rs 102 lakh crores for infrastructure projects was a major boost for the economy and its timely implementation will go a long way in propelling GDP and result in an improvement in connectivity and logistics. While the government has taken measures during the year to address the liquidity challenge by NBFCs and banks, it is imperative that more concrete steps are taken in the direction of a fiscal consolidation path. While real estate has attracted investment over USD 6 billion in 2019, however, the government should take more steps to ease and widen domestic/ international fund flow, fasten approvals/ clearances, provide incentives to aid use of technology to allow faster construction and launch some skill development programmes, specifically aimed towards real estate, which is the second-largest employer in the country.
Executive vice-president, marketing, Casagrand
The real estate sector has been under stress during the past year. The need of the hour is to target key factors that can make a huge impact to the current situation – interest on loans, inputs tax credit and extension of the stress funds to disciplined developers. The 2020 budget is expected to bring back the input tax credit for under-construction properties, by moderately altering the rate upwards of 5%. This will bring more liquidity and encourage more investment in the housing sector. The government should also consider a higher exemption limit for all home buyers during the FY 20-21. Lowering of the repo rate would provide a much needed stimulus to the sector and also boost buyer confidence. The ongoing liquidity crunch has had a cascading impact across developer and the extension of the relief fund will help increase capital flow for all developers and ensure timely delivery of projects. The government should also consider implementation of land reforms that can help boost other sectors.
MD and CEO, Tata Realty and Infrastructure Limited
The government, until now has done everything for the buyers but delayed measures to help developers. The Rs 25,000-crore stress fund and corporate tax reduction, were concrete measures. We hope that Budget 2020 brings about tangible gains, revive demand, ensure flow of liquidity to cater to the demand. The state government’s role is equally critical, to supplement central government’s efforts. The central government can start with granting industry status to the real estate sector. States can give single-window clearance mechanism for faster completion of projects. As seen with several of the previous reforms, the benefits remain to be passed on to the home buyers and it is crucial for this year’s budget to incorporate some relief for tax payers, by easing the tax on house property income. Increasing the deduction for interest on housing loan to at least Rs 5 lakhs, would also help tremendously in boosting demand.
Budget 2020: A difficult recipe to prepare
The union minister for finance and corporate affairs, Nirmala Sitharaman at the ‘halwa ceremony’ to mark the commencement of the printing process for Union Budget 2020-21, in New Delhi on January 20, 2020. Sitharaman will present her second budget (her first for a full year) on February 1, 2020. The minister of state for finance and corporate affairs, Anurag Singh Thakur and other dignitaries are also seen.
Union Budget 2019: Live updates
July 5, 2019
Budget 2019: What did the home buyers and home owners get
Although the Union Budget 2019-20 did not have much for the real estate sector on its own, we look at three main announcements that could affect home owners and home buyers.
Union Budget 2019: What did the real estate sector gain
While the real estate sector had a list of demands, vis-à-vis the Union Budget 2019-20, we look at what the finance minister, Nirmala Sitharaman, managed to give the sector and the demands that went unheeded.
Budget 2019: Home buyers welcome focus on affordable housing but rue lack of other incentives
The Union Budget 2019-20 presented by Nirmala Sitharaman, touched upon various sectors of the Indian economy. ecis2016.org News spoke to a few property buyers, to gauge whether they felt there was anything in it for real estate.
Citizen and development-friendly, future-oriented budget: PM Modi
Prime minister Narendra Modi described the Union Budget as citizen-friendly, development friendly and future oriented and one which will empower the poor and provide better future to the youth.
Terming the Budget a ‘green budget’, he said it focuses on the environment and pitches for green and clean energy. He said the Budget underlines structural reforms in the agricultural sector and has a roadmap to transform the farm sector and doubling farmers’ income.
Changes proposed in TDS
To widen the tax net, the government has proposed to introduce a 5% TDS on all payments made by individuals, to contractors or professionals, in excess of Rs 50 lakhs a year. The TDS could be deposited in the treasury, using his or her permanent account number (PAN) only.
Currently, there is no requirement for an individual or Hindu Undivided Family (HUF) to deduct tax at source on payments made to a resident contractor or professional when it is for personal use, or if the individual or HUF is not subjected to audit for his business or profession. “It is proposed to insert a new provision, making it obligatory for such individual or HUF to deduct tax at source at the rate of 5%, if the annual payment made to a contractor or professional exceeds Rs 50 lakh,” said the Budget document.
For the purpose of TDS, payment made for acquisition of immovable property would also include other charges incidental to the purchase of the property. Such charges include club membership fee, car parking fee, electricity and water facility fee, maintenance fee, and advance fee. The Budget also proposed to tax gifts in the form of money or property situated in India by residents to non-residents. Sitharaman proposed to tax such gifts from on or after July 5, 2019.
Finance minister Nirmala Sitharaman also proposed in the Budget 2019-20 that filing of income tax return will be mandatory for people depositing more than Rs 1 crore in current account, spending over Rs 1 lakh towards electricity bill payment and Rs 2 lakhs on foreign travel in a year.
Union Budget 2019-20: Highlights
FM tables the Union Budget 2019-20 in the Parliament
To discourage cash in businesses, TDS @2% on cash withdrawal exceeding Rs 1 crore in a year from one account, to be imposed.
Affordable housing: An additional deduction of Rs 1.5 lakhs on interest, for loans borrowed upto March 31, 2020, for affordable houses (purchase of house up to Rs 45 lakhs), to be given, taking the total deducion benefit to Rs 3.5 lakhs – a net gain of Rs 7 lakhs, over the tenure of the loan.
PAN and Aadhaar to be made interchangeable, for filing returns: FM
Direct tax revenues have increased by 78%, from 6.38 lakh crores in 2013-14, to over 11 lakh crores in FY 2018.
Surcharge on individuals having taxable income of Rs 2-5 crores and Rs 5 crore and more, to be raised, so that the effective tax rate will go up by around 3% and 7%, respectively.
No tax for income below Rs 5 lakhs per annum, says FM.
Lower corporate tax of 25% to be applicable on companies with up to Rs 400 crores turnover, covering 99.3% of corporate India: FM.
A fully automated GST Refund module to be implemented. This will allow multiple tax ledgers to be replaced by one and invoice details to be captured in a central system.
FM thanks the honest tax payer.
Rs 100 lakh crores to be invested in infrastructure over the next 5 years. An expert committe will be set up, to study long-term finance and give recommendations.
The National Housing Bank (NHB) is a refinancer and lender to the housing sector. It is also a regulatory authority for housing finance. We plan to return the regulation authority of NHB to the RBI: FM
For purchase of high-rated pooled assets of financially sound NBFC amounting to Rs 1 lakh crore during 2019-20, a one-time six-month partial credit guarantee to be given to public sector banks.
NPAs of commercial banks have reduced by over Rs 1 lakh crores over the last year. Record recovery of over Rs 4 lakh crores have been effected over the last 4 years. Public sector banks (PSB) to be provide Rs 70,000 crores of capital.
A massive programme of railway station modernisation to be launched this year.
Government to focus on industry-related skill training. 10 million youth to receive skill training. With major economies around the world set to face labour shortage, India will focus on training in new-age skills such as artificial intelligence (AI), robotics and 3D printing.
Railways to be ecouraged to focus more on suburban services, through special purpose vehicles (SPVs) and investments in rapid regional transport systems. Metro rails to be encouraged, through PPP and transit-oriented development. The dedicated fright corridor will be completed soon and this will free up passenger lines.
Over 81 lakh houses have been sanctioned, out of which construction has been completed for 26 lakh houses under the PMAY Urban.
Rapid urbanisation of India is an opportunity, rather than a challenge. Technology to be used to make cities better.
Swacch Bharat Mission to be expanded, to include solid waste management.
Ensuring safe drinking water supply to all is a priority. Aim is to provide water to all village households by 2024. Rainwater harvesting, groundwater recharge and wastewater management to be focus areas.
1.25 lakh kms of roads will be upgraded under the PM Gram Sadak Yojana, at an estimated cost of Rs 80,250 crores.
1.5 crore rural homes have been completed over 5 years under the PMAY-G. In the second phase 1.95 crore houses will be built by 2022.
It took 314 days to complete a house in 2014-16, which has now reduced to 114 days.
Government to frame a Model Tenancy Law, as the existing laws are archaic: FM
Reforms will be undertaken to promote rental housing. The present laws do not address lessor-lessee relationships fairly, says Sitharaman.
Land parcels from public entities to be used for affordable housing and public infrastructure: FM
New metro rail projects of 300 kms have been approved in 2018-19. Also 210 kms of metro lines have been operationalised in 2018-19. A total of 657 kms of metro rail network has become operational in the country.
Railway infrastructure needs investment of 50 lakh crores upto 2030. Public-private parternship to be used to develop rail
A comprehensive restructuring of the National Highways Programme will be carried out, to ensure the creation of a National Highways Grid of desired capacity : FM
The government has given a massive push to connectivity through the Bharatmala road transport projects and Sagarmala waterway projects, in addition to the UDAN scheme.
India is already the 3rd largest economy. The Indian economy has grown from USD 1.4 trillion in 2014 to UDS 2.7 trillion now and we can easily become a USD 5 trillion economy in the next few years.
10 focus areas of the government, as laid down in the Interim Budget:
- Social infra
- Digital India
- Pollution-free India
- Make in India
- Water management
- Space programmes
- Export of food grains
- Healthy society
- Safety of citizens
- Minimum government, maximum governance
Reform, Perform and Transform, is the mantra of the government, says FM.
FM Nirmala Sitharaman begins presenting her maiden budget
Text of finance minister Nirmala Sitharaman’s budget speech
Finance minister to do a tightrope walk in Budget 2019-20
A mini-stimulus to take the economy out of five-year low, alongside giving some tax relief to common man may be on the cards, as finance minister Nirmala Sitharaman does a tightrope walk, balancing the needs of the economy and fiscal constraints in her maiden budget.
The budget is expected to boost spending, at the cost of short-term slippage in fiscal deficit targets. Some believe she may give relief to the common man by raising personal income tax threshold for certain categories, while at the same time, upping spending on agriculture, healthcare and social sectors.
Also, there is expected to be a big push for infrastructure spending including on roads and railways to drive growth which had slowed to a five-year low of 5.8 per cent in the first three months of 2019.
The sluggishness in the economy has led to expectations of the budget containing further stimulus measures to boost the growth through new policy initiatives and continued reforms to achieve accelerated growth and increase in employment. This may be in the form of a combination of capital infusion in the public sector banks, removing the roadblocks that have crept into the Insolvency and Bankruptcy Code process, providing liquidity to non-bank financial companies (NBFCs), address the agrarian crisis and step up allocations for infrastructure and social sectors.
However, the combined effect of all these would be that the budget deficit may widen to 3.5 per cent of gross domestic product (GDP) in 2019-20 that began on April 1, instead of 3.4 per cent target. For Sitharaman, the biggest constraining factor is lower-than-expected growth in tax revenues, particularly those of the goods and services tax (GST), something she may look to bridge through aggressive stake sale in PSUs, higher dividend from the RBI, rollover of some FY20 expenditure to FY21, cut back in plan expenditure and increase in off-balance sheet expenditure with portion of subsidies being transferred to state-owned enterprise balance sheet.
FM reaches parliament
Finance minister Nirmala Sitharaman has reached the parliament after meeting the president, ahead of the presentation of the Union Budget 2019-20.
The Union Minister for Finance and Corporate Affairs, Smt. Nirmala Sitharaman departs from North Block to Rashtrapati Bhavan and Parliament House, along with the Minister of State for Finance and Corporate Affairs, Shri Anurag Singh Thakur and the senior officials to present the Union Budget 2019-20, in New Delhi on July 05, 2019.
Image source: PIB
July 4, 2019
Budget 2019: What do home buyers need from the finance minister?
We look at some suggestions, on what India’s first full-time woman finance minister can do, for home buyers, in the upcoming Budget 2019
Budget 2019: Top 5 expectations of the real estate sector
With the real estate sector facing a liquidity crunch and multiple taxes adding to the burden on home buyers amidst a slowing economy, we look at the expectations of the real estate fraternity, from the first budget of Modi Sarkar 2.0
Economic Survey pegs economic growth at 7% for FY20, fiscal deficit at 3.4%
The government, on July 4, 2019, pegged the growth rate for the current fiscal at 7%, marginally up from the five-year low of 6.8% recorded in the previous fiscal. According to the Economic Survey for 2018-19, tabled by finance minister Nirmala Sitharaman in the Rajya Sabha, “Real GDP growth for the year 2019-20 is projected at 7%, reflecting a recovery in the economy after a deceleration in the growth momentum throughout 2018-19.” The fiscal deficit estimate for 2018-19 has been retained at 3.4% of the GDP, same as that projected in the interim budget.
Image source: PIB
National Urban Innovation Hub to drive urban transformation: Economic Survey
“Housing is one of the fastest moving sectors in the country. According to the Census 2011, 377.1 million Indians, comprising 31.14% of the country’s population lived in urban areas, which is projected to grow more than 600 million by 2031. Urbanisation in India has become an important and irreversible process, and it is an important determinant of economic growth and poverty reduction. The process of urbanisation has been characterised by an increase in the number of large cities, although India may be said to be in the midst of transition from a predominantly rural to a quasi-urban society.
To drive the new urban transformation agenda of the government through innovation and delivery, there is a growing need to nurture a well-knit ecosystem of urban innovation, to encourage innovation in technology, governance, financing, and citizen engagement. It is envisaged that the National Urban Innovation Hub (NUIH), with necessary physical and digital infrastructure will anchor the innovation efforts and build necessary capacity for urban transformation. NUIH will be the apex national level institution that will drive the MoHUA’s whole-of -system innovation through a hub-and-spoke network across states and UTs and for delivering the capacity building and governance reforms in urban sector.”
– Economic Survey 2018-19
Chairman and managing director, Knight Frank India
Deduction on the principal repayment of housing loans (Section 80 C): At present, Section 80 C of the Income Tax Act does not provide for a focussed benefit on housing. Tax payers have numerous investment alternatives to choose from and the lack of tax benefit on the principal amount of home loans, makes them put their home purchase decisions on hold, thus impacting sales. A separate annual deduction of Rs 1,50,000 for principal repayment, will provide the much needed fillip to opt for home loans and push real estate sales.
NBFC liquidity crisis: The capital crunch faced by non-banking financial companies (NBFCs), has been negatively impacting the developer community and the real estate sector as a whole. NBFCs had come to be the primary lenders for most builders and developers in the last four-five years. However, as they now have no capital to lend, they are not even honouring their prior commitments, including finance for construction costs, thereby, stalling many under-construction residential projects across India. The government needs to take fiscal measures, to address the worsening NBFC liquidity crisis. Permission to issue tax-free bonds to raise capital, will be a prudent step in this direction.
Infrastructure: Besides real estate, another prominent area of intervention is urban mobility. On this front, the government should accelerate initiatives on infrastructure development, which will open up cheaper land parcels for housing and ensure better affordability.
Hoping for sweeteners, amidst a slowing economy
The ‘halwa ceremony’, marking the commencement of the printing of documents relating to the Union Budget 2019-20, was held in the North Block on June 22, 2019, in the presence of the union minister of finance and corporate affairs, Nirmala Sitharaman.
MD, south Asia, RICS
On the overall front, we believe that the budget will focus on ensuring further streamlining of regulations and reforms, undertaken by the government. Specifically, with respect to the real estate/construction sector, we expect to see a better roadmap for the implementation of the Smart Cities and Housing for All missions, which are yet to show promise on achievement of desired objectives. With a view to boost the Indian economy, the union budget is likely to enhance funding for the sector, in addition to ensuring financial hygiene. While investments in infrastructure development will get a large share, the budget should also help to increase access to funds for developers, for the development of affordable housing projects, in addition to initiation of rental housing. A clear roadmap for regulations is needed and further corrective measures should be taken, to rationalise the GST.
Founder and managing director, CASAGRAND Builder Pvt Ltd
Over the past few months, well-directed measures, such as extending the usage of capital gains, a stronger push for affordable housing and a revision in GST benefits, have been launched. In the upcoming union budget, we wish for the introduction of methods to address structural issues in the sector, especially rising input costs following the abolishment of Input Tax Credit (ITC), the engulfing liquidity crisis emanating from the NBFCs and the rising NPAs in the banking sector. It would also be beneficial, if the measures could be introduced to provide a more enabling environment for REITs and introducing efficient methods to finance the funding of land for projects, especially those with a small ticket size per unit.
PM meets economists ahead of Budget 2019
Further opening of the banking and insurance sectors for FDI, speeding up disinvestment process and management of water resources, were among the focus areas of prime minister Narendra Modi’s interaction with economists and industry experts on June 22, 2019, to achieve higher economic growth, said sources. During the interactive session, ahead of the presentation of the Union Budget, speakers made a case for ‘single-minded pursuit’ to achieve growth, they added. A release issued by the Prime Minister’s Office (PMO) said that the session, organised by NITI Aayog on ‘Economic Policy – The Road Ahead’, was attended by over 40 economists and sectoral experts.
Government to bring more reforms, raise farm investment to boost growth: President
Prime minister Narendra Modi-led government, in its second term, will implement more economic reforms, raise investment in the farm sector, provide collateral-free loans to entrepreneurs and further simplify GST, to boost economic growth, president Ramnath Kovind said, on June 20, 2019, in his customary address to the joint sitting of the two houses of parliament. In an indication of what we could expect from the budget, the president’s speech laid out the priority areas for the government. The government will shortly bring a new industrial policy to make India a manufacturing hub and the process of simplification of rules will be expedited to propel the country into top-50 nations on the ease of doing business ranking, Kovind added.
Vice-chairman and managing director, SOBHA Limited
- One of the areas that require the immediate attention of the government, is increasing the threshold value of affordable housing under the Pradhan Mantri Awas Yojana (PMAY) scheme from the current Rs 45 lakhs to 75 lakhs. Similarly, we recommend that the carpet area threshold for affordable housing be increased from 60 sq m to 90 sq m in metros and from 90 sq m to 120 sq m in non-metro cities, in line with the consumption trends. This will bring more projects under the purview of ‘affordable housing’ and enable a wider segment of the market to avail of the income tax benefits.
- Equally important is to clear the confusion on GST rate for Joint Development Agreement (JDA) or sale of development rights, especially for commercial projects. While a specific exemption has been granted for transfer of development rights in a residential JDA, commercial developments have not been covered under the said exemption.
- On the subject of unsold inventory, relief is given by not charging the same under income tax, for a period of 1 year from the end of the year in which the certificate of completion is obtained. The interim budget had proposed to extend the benefit for two years. However, we recommend specific exclusion of unsold stock from income tax liability, considering the challenging market scenario.
- For home buyers, we believe that a deduction on principal repayment of a housing loan of up to Rs 5 lakhs per annum should be considered for exemption, in addition to the current Rs 1.50 lakhs per annum under Section 80 C of the IT Act. Along with this, we suggest that the set-off limit in case of loss under ‘house property’ with any other head of income, of Rs 2 lakhs, is removed. Further, we urge that 100% exemption on home loan interest, instead of the current limit of Rs 2 lakhs, is provided.
FM discusses budget proposals with financial sector regulators
Finance minister Nirmala Sitharaman reviewed the state of the economy and discussed various budget-related suggestions and proposals, at a meeting with financial sector regulators on June 19, 2019. Sitharaman will present the first budget of Modi 2.0 government, against the backdrop of India’s economy hitting a five-year low growth of 6.8 per cent in 2018-19. Financial sector regulators, including RBI Governor Shaktikanta Das, Sebi Chairman Ajay Tyagi, and IRDAI chief Subhash Chandra Khuntia, and top finance ministry officials were present in the meeting of the Financial Stability and Development Council (FSDC) headed by the finance minister.
India’s first full-time female FM to present Union Budget on July 5, 2019
Housing News Desk
Finance minister Nirmala Sitharaman will present the Union Budget 2019-20 on July 5, 2019. Sitharaman, a Rajya Sabha member from Karnataka, is the first woman in 48 years to hold charge of the Finance Ministry, since former prime minister Indira Gandhi. She is also the first full-time female finance minister of India.
Interim budget 2019: Live updates
February 1, 2019
Budget 2019 highlights: What did home buyers and the real estate sector gain
Here’s a look at the important announcements in the interim budget 2019 and its expected impact on the real estate sector and home buyers
Budget 2019: 3 main tax benefits for property owners
The interim budget 2019 has offered some unexpected benefits for owners of property. We look at the three main announcements that are likely to bring tax relief to home owners.
Budget 2019 proposes to hike TDS threshold on rent income, to Rs 2.4 lakhs
In a move that may please landlords and tenants, finance minister Piyush Goyal has proposed to increase the TDS limit on rental income from the current Rs 1.80 lakhs to Rs 2.4 lakhs.
Budget 2019: I-T exemption limit hiked to Rs 5 lakhs
Finance minister Piyush Goyal, in his interim budget 2019, doled out tax sops to the middle-class, including doubling of the income tax exemption limit to Rs 5 lakhs.
Budget 2019: Government proposes to raise TDS on interest income to Rs 40,000
Finance minister Piyush Goyal, in his interim budget 2019, has proposed to provide tax relief on interest earned from deposits, by increasing the TDS limit from Rs 10,000 to Rs 40,000 per annum.
FM tables the interim budget 2019
This is not just an interim budget, this is a vehicle for the developmental transformation of the nation: Finance minister, Piyush Goyal.
Interim FM Piyush Goyal presents the interim budget 2019
Head – consulting services at Colliers International India
With exemption on notional rent for self-occupied second homes, the Government has addressed a significant pain point for the middle class, particularly migrants with dependant parents. Along with capital gains exemption for up to two houses, this will allow people to have a diversified portfolio for real estate investment – which will spur demand across the country, including Tier 2 and Tier 3 cities.
Managing Director (south), Colliers International India
Review of “GST impact on homebuyers” by group of ministers is a positive step, but it is disappointing to note there is no timeline around the changes to be introduced and implemented. It’s will be a wait and watch on this front unfortunately.
Government’s 10-point vision for 2030:
- To build next-gen infrastructure – physical as well as social
- To build a Digital India that reaches every citizen
- Clean and Green India
- Expanding rural industrialization using modern industrial technologies
- Clean Rivers
- Oceans and coastlines
- Placing an Indian astronaut in space by 2022
- Self-sufficiency in food and improving agricultural productivity
- Healthy India, with distress-free and comprehensive wellness system for all
- Minimum Government, Maximum Governance, with proactive, responsible and friendly bureaucracy, electronic governance
- We are poised to become a $5-trillion economy in next 5 years and aim to be a $10-trillion economy in 8 years.
- Anti-black money initiatives have unearthed undisclosed income of Rs 1.3 lakh crores.
- Businesses with annual turnover of less than Rs 5 crores , which comprise over 90% of GST payers, will be allowed to file quarterly returns.
- GST collection crosses Rs 1 lakh crores in January 2019.
- GST burden on home buyers – We are waiting for recommendations from the council of ministers and will take a final call after that: FM.
- GST was the biggest tax reform since independence: FM.
Head – consulting services at Colliers International India
India is clearly one of the fastest growing large aviation markets in the world, with an estimated requirement of 2,300 aircraft over the next 20 years. With enhanced private sector investment through initiatives like the privatisation of the 6 airports currently underway, the Government can accelerate the pace of infrastructure development, create employment and diversified regional development – particularly in the North East. This will also see new investment going in tourism-oriented developments like hospitality, warehousing and retail, contributing to real estate demand and overall GDP growth.
- All verification and scrutiny of returns will be done electronically by an anonymised tax system without any intervention by tax officials, in the next 2 years.
- 99.54 per cent tax returns have been accepted, without scrutiny.
- Simplification of direct tax system – tax collection almost doubled to Rs 12 lakh crores from Rs 6.38 lakh crores in the last 5 years.
- Cost of mobile data and voice calls in India are probably the lowest in the world. Mobile and mobile part manufacturing companies in India have increased from 2 to 268.
- Installed solar generation capacity increased by 10 times in the last 5 years.
- Container cargo movement in inland waterways to be introduced in the north-east, as well by developing river Brahmaputra.
- All unmanned railway crossings have been eliminated. The previous year was the safest in the Railways’ history: FM.
- Today, India is the fastest highway developer in the whole world. 27 kms of highways built every day: FM.
- The country has over 100 operational airports.
- Defence budget increased to over Rs 3 lakh crores.
- National programme on artificial intelligence (AI) is in the offing. Nine priority areas and a portal will be created soon.
- Pension scheme for unorganised workers, Pradhan Mantri Shram Yogi Mandhan, to provide pension of Rs 3,000 per month, after the age of 60. The plan is intended to benefit 10 crore workers.
- Gratuity limit increased from Rs 10 lakhs to Rs 30 lakhs.
Head – consulting services at Colliers International India
Rural connectivity is an important component of development for driving rural consumption and inclusive growth. The jobs and economic opportunities created by rural connectivity will also benefit sectors like microfinance, healthcare and logistics.
- Pradhan Mantri Kisan Samman Nidhi announced, to give Rs 6,000 per year income support to farmers with less than 2 hectares of land. This initiative will cost Rs 75,000 crores and is aimed at benefiting 12 crore small and marginal farmers.
- We have constructed 1 crore 53 lakh houses under the Pradhan Mantri Awas Yojana (PMAY) in the last four years (2014-18).
- We have tripled the pace of construction of rural roads, in our tenure.
- Rs 60,000 crores is being allocated to MNREGA.
- The RERA and the Benami Transactions Act are ushering an era of transparency in the real estate sector: FM
- FDI that India attracted in the last 5 years stands at $ 239 billion.
- We have undertaken path-breaking reforms, including the introduction of the GST, he says.
- Fiscal deficit brought down to 3.4 per cent, according to the revised estimates for 2018-19.
- We are the sixth largest economy of the world, he says.
- Budget begins, FM makes reference to Housing For All.
Text of finance minister Piyush Goyal’s budget speech
What can the aam aadmi expect from the budget?
Income tax concessions for individuals, a farm relief package, support for small businesses and possible populist spending measures, may be part of the budget that finance minister Piyush Goyal is expected to present on February 1, as the government makes a last-ditch attempt to woo voters ahead of the general elections.
Although it is supposed to be an interim budget or a ‘vote on account’, it is widely expected that Goyal may go beyond seeking parliament’s nod for government expenditure for four months of next fiscal and announce sops to woo rural and urban middle-class voters, industry sources and experts said.
Promise of debt waiver for farmers and a minimum income for the poor, if voted to power: Goyal may announce some form of a direct transfer of cash to farmers. This may or may not replace subsidies that the farmer gets but will certainly be aimed at addressing rural distress.
Income tax slabs: Basic exemption limit may be raised from Rs 2.5 lakhs to Rs 3 lakhs for individuals of less than 60 years of age and from Rs 3 lakhs to Rs 3.5 lakhs for those aged 60 years or more but less than 80. Women taxpayers may get higher basic exemption of Rs 3.25 lakhs or even at par with senior citizens, as per sources.
Tax exemptions: An alternative to raising the exemption limit, is to raise the 80C deduction to Rs 2 lakhs from Rs 1.5 lakhs, to encourage taxpayers to save more for their future. Considering delays in housing projects and also rising interest rates, deduction of interest amount on housing loan for a self-occupied house property may be enhanced to Rs 2.5 lakhs from Rs 2 lakhs. The set-off cap of adjusting loss from house property against other heads of income may also be accordingly raised to Rs 2.5 lakhs from Rs 2 lakhs, according to sources.
SMEs: Also being speculated are cheap loans for small businesses and increased rural spending.
For investors, these sops may translate into another breach in the budget deficit target of 3.3 per cent of GDP for the current fiscal and a possible record borrowing in the coming financial year. Goyal may also look at higher interim dividend from RBI and deferring subsidy payouts on fertiliser as well as LPG and kerosene, to provide funds for the populist schemes. Credit rating agencies have warned that without bringing down other spending, a higher farm subsidy bill will increase future fiscal deficits.
FM heads to the Parliament to present the interim budget 2019
The Union Minister for Railways, Coal, Finance and Corporate Affairs, Piyush Goyal departs from North Block to Rashtrapati Bhavan and Parliament House, along with the Minister of State for Finance and Shipping, P Radhakrishnan, the Minister of State for Finance, Shiv Pratap Shukla and senior officials, to present the Interim Budget 2019-20, in New Delhi on February 01, 2019.
Stocks in the green
Housing News Desk
Real estate and infrastructure stocks have been trading marginally in the green, prior to the announcement of the interim budget 2019. Overall, the Sensex and Nifty are also up.
January 31, 2019
FM to present interim budget; no Economic Survey in the offing: Sources
Finance minister Piyush Goyal will, on February 1, 2019, present the Narendra Modi government’s sixth and final budget, which will be an interim one, keeping up with established tradition, sources confirmed, on January 30, 2019.
The budget will seek Parliament’s nod for spending for four months, till a new government is sworn-in. Official sources said the budget documents will contain revenue and expenditure projections for the entire 2019-20 fiscal year beginning April 1, 2019, but a ‘Vote on Account’ will seek parliament’s nod for the expenditure side.
While it is widely expected that the interim budget may contain tax sops and a certain package for the farm sector, there will be no Economic Survey, detailing the state of the economy. The new government, elected after the general elections due by May, is expected to present a full budget in July 2019, along with the Economic Survey.
It was speculated that the budget presentation on February 1 will be just like a full-fledged one, with sops and announcements to woo voters. The Lok Sabha website, however, in its Provisional Calendar, referred to the event as an interim budget.
Confusion was created after the Commerce Ministry, on January 30, 2019, in a WhatsApp message to the media said: “Do not refer budget 2019-20 as interim budget, it is officially referred as general budget 2019-20.” However, the Finance Ministry later clarified that the budget will be called interim budget 2019-20.
National president, NAREDCO
Rationalisation of taxes would be the one most important factor that the real estate industry would expect at this point of time, from the upcoming budget. This is not just about reducing taxation rates. I would also add the expectation of bringing stamp duty within the purview of GST; Input credit of construction against output of renting; Incentivise rental housing to meet the ‘Housing for All by 2022’ commitment; and increasing the limit of interest deduction paid on home loan, from Rs two lakhs to Rs three lakhs.
Expectations from the interim budget 2019: A reality check for realty
With the government under pressure over a slowing economy, lack of jobs and the need to maintain fiscal prudence, can a widely-expected populist interim budget before the general elections have any sops for the real estate industry? We examine…
What do home loan borrowers need from budget 2019?
With the interim budget 2019 set to be announced prior to the general elections, we look at some of the sops that the finance minister can announce, vis-à-vis housing loans, to woo the home buyer segment.
MD and CEO, Tata Realty Limited
We are hopeful that this budget will announce a steady structure, for approval processes. The first step in this regard, could be to have a master approval process for zoning levels or environmental clearances. Additionally, the stabilisation of stamp duty norms across states, will further help in reducing the misinterpretation through a simpler tax regime. We also believe that GST rates should be brought down to five per cent, as this could generate more demand. With unsold inventory still high, a lower GST rate could help in the reduction of the same. We would also urge the Government to create a new fund that will help buy out stressed inventory or offer tax concessions for asset reconstruction companies. For home buyers, the government should increase the income tax deduction limit for individuals, on interest payment against home loans.
Managing director, Century Real Estate
I am hopeful of more spends towards digitisation of land and/or property records, which is in tune with the Digital India vision of the PM. This will considerably reduce litigation, free up more lands in cities to make it more affordable and reduce project timelines, which will directly translate to lower costs for the consumers. Another valuable provision in the budget, would be the scope for financial institutions to fund land purchase, as it will help reduce the costs and make the properties more affordable. Easing the approval process – e.g., site approvals, environmental certificate and commencement certificate, among a host of others, is the need of the hour, as it will greatly reduce the cost of construction and hence, the cost of the final unit(s). In addition, if the government can introduce a centralised agency that will act as the sole custodian of title insurance, it will help with speed of delivery and there will also be more transparency and uniformity in the real estate market.
5 expectations that Budget 2019 must address, to uplift the real estate sector’s sentiment
With the real estate sector facing the problem of high inventory, low liquidity and high input cost, we look at some of the top issues that one hopes the interim budget will address, for a revival of the sector.
Interim budget 2019: Let’s not get too excited
What can home buyers and developers expect, from the interim budget 2019, which is set to be announced just before the general elections? We get an expert’s opinion on the areas that need to be addressed and whether any action is likely to be taken.
Chairman and managing director, Knight Frank India
‘Industry Status’ to real estate: It is time that real estate gets industry status. This will enable developers to raise funds at lower rates and reduce their cost of capital, which would eventually have a bearing on overall project cost.
GST: Abatement for land should be increased to 50 per cent: Presently real estate falls under the 18 per cent tax bracket of the GST with one-third abatement for land, taking the effective tax rate to 12 per cent. However, in major metros, the share of land is more than 50 per cent of the project cost. We, therefore, recommend that the government aligns this with market realities and accordingly, increases the abatement for land to 50 percent, thereby, bringing down the effective tax rate to nine per cent.
GST on affordable housing: The current GST rate of 12 per cent, coupled with one-third abatement for land, making it an effective GST of eight per cent, is adding huge upwards pressure on the overall cost of house. We recommend lowering of the GST rates for affordable housing projects to effective six per cent, by enhancing the abatement for land to 50 per cent.
Deduction on the principal repayment of housing loans (Section 80 C): To augment the house purchase decision and provide some fillip to real estate sales, it is suggested to carve out a separate annual deduction of Rs 1,50,000, for the principal repayment.
Real Estate Investment Trust (REIT): For unit holders, the long-term capital gains holding period for REIT units, should be brought down from three years to one year (at par with equity investments). This shall make REITs more attractive for the investors.
Will the interim budget 2019 be a full-fledged budget?
Former finance minister Yashwant Sinha, on January 28, 2019, warned that it would be ‘entirely improper and unconstitutional’, if the Modi government presents a full budget ahead of the Lok Sabha polls, as he asked it to stick to the convention of outgoing dispensations presenting an interim budget. Amid speculation that the government may present a full budget on February 1, 2019, Sinha said there is no precedence of an outgoing government doing so.
“It would be entirely improper and unconstitutional on the part of this government to present a full budget,” he said, adding it should neither table the economic survey, which is generally presented a day before the budget is tabled, nor present the Finance Bill. The government may claim that the Constitution does not bar it from presenting a full budget but convention is equally important, Sinha said and asserted that the Article 116 makes provisions for presenting interim budgets, because this is what an outgoing dispensation should do.
A strong critic of the BJP-led National Democratic Alliance (NDA) government, Sinha also accused it of ‘dressing up’ economic figures and said statistics brought out by it are ‘not trustworthy’ anymore. Slamming the government’s handling of the economy, he said the country faced an ‘unprecedented’ agrarian distress, with employment not picking up and the huge non-performing asset (NPA) problem being not tackled the way it should have been.
Interim finance minister to present interim budget 2019
Housing News Desk
Finance minister Piyush Goyal will present the interim budget 2019 on February 1, 2019. Goyal, who is also the minister for Railways and Coal, was given the additional charge of the Finance Ministry on January 23, 2019, owing to finance minister Arun Jaitley’s absence. Jaitley, who suddenly flew to the United States on medical grounds, is said to be recuperating after a surgery.
Can the real estate sector expect a sweet budget?
The Minister of State for Finance, Shiv Pratap Shukla; the Minister of State for Finance and Shipping, P Radhakrishnan; the Secretary of the Department of Economic Affairs, SC Garg; and the Secretary of the Department of Expenditure, Shri Ajay Narayan Jha at the ‘halwa ceremony‘, to mark the commencement of the printing process for the union budget 2019-20, in New Delhi on January 21, 2019.
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