FY 2016-17 Budget for Real Estate
FY 2016-17 Budget for Real Estate said by Finance Minister, Arun Jaitely was tuned to assist the poor and also help create more entrepreneurial opportunities in the country. This effort was applauded and several areas of relief in taxation for both individuals and companies were appreciated. FY 2016-17 Budget for Real Estate.
The real estate industry also waited with baited breath for signs of encouragement from the budget. A revival in the real estate market that was suffering from a slump will most certainly help support the growth and recovery of several related industries. We can examine the impact of the new budget proposals from the perspective of buyers and real estate developers separately. Positive push for FY 2016-17 Budget for Real Estate
Impact of the budget from the buyer’s perspective *
Exclusion of houses under 60 sq mt (645 sq ft) from service tax.
This measure will give impetus to affordable housing and help achieve the aim of Housing for All by 2022 * [Real Estate Investment](http://www.pinclick.com/owner) Trusts (REITs) are exempt from dividend distribution tax (DDT)
Despite the announcement last year, REITs had not taken off; but with the removal of DDT it will give a boost to investment in real estate segment for investors and open up additional sources of financing for developers.
* For the first time buyers, with house value of Rs 50 lakhs and loan amount of Rs 35 lakhs, Rs 50,000 is exempt from tax. This move will also help boost demand for the realty sector both from investment as well as residential use segments.
* HRA deduction raised to Rs 60,000 from Rs 24,000
This will bring in much needed relief to taxpayers who suffer due to delays in the completion of the projects.
Impact of the budget from the builders’ perspective
For builders in the affordable housing construction, there will be a 100% deduction of profits for housing units lower than 30 sq mt (Non-Metros) and 60 sq mts (Metros) approved between June 2016 to March 2019 and completed within 3 years of approval. This again is an initiative to reinforce the aim of Housing for All by 2022.
* There will be skill development reforms for employees in the construction sector
* Excise duty exemption, presently available to Concrete Mix manufactured at site for use in construction work at such site has been extended to Ready Mix Concrete also
* This will go a long way in bringing about clarity on land titles.
There is still a strong commitment from the government for schemes. Schemes like Housing for All, 100 Smart Cities and Affordable Housing.
These key initiatives have received more attention and have also gained from the new budget.
These are a positive note and might help land developers also in the future for gaining more market for lands that are not in prime metro areas. The real estate sector was looking for two key developments – GST and Real Estate Regulatory Bill.
They are still not final and many real estate experts have opined that only with this finalization will the industry get a real boost.
The initiatives are pragmatic but conservative and won’t create the big band effect that many were looking forward to.
Until then the new budget should bring in more first time buyers to invest into [affordable housing](http://www.pinclick.com/house-for-sale) options this year.
