What real estate gained in Budget 2020-21?
Nirmala Sitharaman, Minister of Finance, presented the Union Budget 2020-21 on February 1. This was the second budget in the second term of the current government. The Budget has proposed to extend the additional Rs 1.5-lakh tax benefit on interest paid on affordable housing loans to March 2021. Besides, it has also proposed to extend by one year the date of approval of affordable housing projects for availing of tax holiday on profits earned by builders. Another move, which could marginally benefit the industry, is the proposal to change the way in which capital gains on property deals is computed. Currently, while taxing income from capital gains, business profits and other sources in respect of transactions in real estate, if the consideration value is less than the circle rate by more than 5%, the difference is counted as income both in the hands of the purchaser as well as seller. In order to minimise hardship in real estate transaction and provide relief to the sector, the limit of 5% has been increased to 10%. Ramesh Nair CEO & Country Head, JLL India, "The Union Budget announcement today continues to focus on affordable housing and infrastructure, more specifically, urban infrastructure and logistics. However we do not see significant impact on the realty sector." Rajan Bandelkar, President, NAREDCO West & Director, Raunak Group, "The real estate sector had pinned high hopes on the Budget, as the sector has been reeling under pressure and is on the verge of collapse. The Budget has only two positive proposals for the sector viz. one more year of extension for approval of affordable housing projects for availing a tax holiday and extension of additional Rs 1.5 lakh tax benefit on interest paid on affordable housing loans. But the sector's key demands such as allowing restructuring of loans, extension of a subvention scheme, raising the limit of Rs 45 Lakh for affordable housing, scrapping of capital gains on the sale of properties, extending the timeline of capital gains, are not met with. " Surendra Hiranandani, Chairman and Managing Director, House of Hiranandani, "We were hopeful that the budget would chart out fresh stimulus in terms of bold fiscal measures for real estate sector to outperform its growth traction. We had certain expectations from the government from this budget which have not been fulfilled which includes our demand for Industry status, single window clearance and reinstatement of Input Tax Credit in GST. There was significant expectation to cut GST rates to a single, standard rate, and not have multiple rates or taxes. It seems the entire focus of the government was on the latter while undermining the importance of real estate to the economy." Ravindra Pai, MD, Century Real Estate shared, "Union Budget 2020 has shown a positive long-term direction on reviving growth with Rs. 1.03 Trillion spend on Infrastructure, Income Tax Cuts, DDT Exemption and Manufacturing focus. For the Real Estate Sector, it was a mixed bag. The extension of INR 1.5 lakh tax benefit and approval window for tax holiday on affordable housing are welcome steps. While the Rs. 25,000 crore stressed asset fund by the Government is taking off, specific measures to resolve the liquidity such as restructuring window for stressed projects or further tax benefits to individuals on housing across all segments, would have helped in boosting immediate demand and growth." Sangeeta Prasad, MD & CEO, Mahindra Lifespace Developers Ltd added, "The proposed policy for the development of data centre parks indicates a renewed thrust on data as a valuable resource that will fuel the nation’s growth. The Budget also acknowledges the huge employment opportunity that exists in construction, and the operations and maintenance of infrastructure projects. Plans announced for ensuring cleaner air in India’s cities will support emissions reductions targets, in line with our commitment to climate action." Kishore Jain, President, CREDAI Bengaluru, "The concession provided to the real estate transactions will bring in more investment to the sector. The government did not announce schemes or policies to fulfil the promise of ‘’Housing for all by 2022”, within two years. Real Estate being one of the key contributors to the country’s economy, it is important to address the problems faced by the sector." Rishi Jain, Managing Director, Jain Group, "The minor tax proposals for the housing sector shows that government are concerned about the sector, but absence of big ticket reforms also clears its intent that nothing major should be expected . Also no major moves were announced to ease the credit woes. "
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