Union Budget 2016-17 Developers’ Take

In the given economic environment, this Budget is overall balanced and is growth oriented with immense capacity to unlock the initiatives taken by this Government. As far as the housing sector is concerned, it has come out to be the primary beneficiary. While cars, luxury items, jewellery, travelling, dining, tobacco have all become costlier housing sector has gained the much needed attention. Read on to know the reactions of real estate developers: Navin M Raheja, CMD Raheja Developers, Chairman Advisory council on real estate, NAREDCO and Chairman real estate committee FICCI, said: “This budget scores 8/10 in the affordable housing and Housing for All initiative which is still relatively new and unexplored segment, else has very little to offer for the balance of the industry (in terms of some fiscal relief) which is currently struggling. The continued focus and high budgetary allocation on infrastructure development always augurs well and has a domino effect for real estate, and helps increase both the depth and breadth of the market. Hopefully, the Government will be able to greatly enhance the speed of execution on the ground. A 100% deduction to entities engaged in affordable housing coupled with abolition of Service Tax for houses under 60sqm will encourage more investment in the Housing for All by 2022. Developers will now look at this segment more seriously and will be compelled to invest and attract better technologies for construction and project management. The incremental IT deduction of Rs.50K (for housing loans <=35L and house value <=Rs.50L) is a very positive step to incentivise the mid tier segment and attract young buyers into real estate investment. As a young nation, this is a large market for real estate – hopefully States will support this step with relevant corrections in density norms. The abolition of excise duty on RMC manufactured and consumed at site is a relief and eliminates unnecessary confusion and conflict. Lastly, the exemption of REITs from DDT is the right thing to do; it will favorably impact existing large commercial players to realize value, attract developers (and foreign capital) to create assets of lasting value, and also open a new channel of real estate investment to retail investors.” Surendra Hiranandani, Chairman & Managing Director, House of Hiranandani, said: “The budget 2016 outlined the shift in focus to the rural economy as the finance minister introduced a slew of taxes and cess to be imposed on services to help rural welfare programmes. It also reflected the government’s concern and priority to improve the investment climate with a view to stimulate growth. The massive push for improvement in infrastructure including outlay for roads, railways and development of smaller airports to improve connectivity will benefit the real estate sector in the long run. The abolishment of DDT is a welcome move and will put the REIT structure in India at par with global standards. REIT listing will soon be a reality. The finance minister also announced certain other measures to bring investment into the real estate sector, while giving special emphasis on affordable housing, few long pending demands of the real estate sector were not met in the budget. Industry status to the real estate sector, single window clearance, tax concessions on home insurance premiums are some of the measures that could have significantly boosted the sentiments in the sector. Below few key points offered to the real estate sector by the government in the budget. Removal of Dividend Distribution Tax (DDT) on Real Estate Investment Trusts (REITs): DDT has long been one of the biggest hurdles that made REIT financially unviable for Indian commercial stakeholders. Removal of DDT (tax levied on the dividend paid to investors) will result in a rush of investment in REITs and this could prove to be decisive for the sector. This will help developers raise funds and will also effectively address issues pertaining to transparency, liquidity and execution of property developments across the country, that will spur growth in the future. Boost for first time home buyers: By introducing an additional interest deduction of Rs 50,000 on home loans not exceeding Rs 35 lakhs, and the value of homes not exceeding Rs 50 lakhs the budget has given some reason to cheer to the first time home buyers.  This could boost demand for housing in smaller cities where the cost of ownership is on the lower side. However, this will make little or no difference if one is buying a property in any metro city in India where housing prices are significantly higher. So, the relief will not make any material difference to the sector. Modernization of land records under digital India initiatives: The government has provided Rs150 crores for modernization of land records which aims at ushering in the system of providing online access of land details and plugging of loopholes. This is a welcome move for the sector as the integrated land management system will not only increase the transparency in the whole system but will also expedite the process of land acquisition and enable holistic growth. Tax deduction for construction of affordable housing: The service tax exemption for developers focusing on affordable housing with unit sizes not exceeding 30 square meters in the larger cities and 60 square meters in the smaller cities is definitely a positive move and will encourage private participation as well. This will increase profits making it easier for the developer to attract foreign and domestic investments in housing projects. It is in line with the governments vision to boost affordable housing. It will be a challenge though for developers to deliver in the three year time frame given the lack of single window clearance for the projects. Tax relief on HRA: The increase in reduction limit from  Rs 24,000 per annum to Rs 60,000 per annum is a welcome move and will give the much needed push to rental housing across major cities in India. It could also boost demand in the long run. Kishor Pate, CMD, Amit Enterprises Housing Ltd., said: “This Budget could have done a lot more for the real estate sector. However, there were some positives. The fact that the annual housing rent reduction limit has been increased from Rs. 24000 to Rs. 60000 could lead to an almost immediate uplift for rental housing across the major cities. This can also potentially encourage the sentiment for home ownership in the long run. Also, first-time home buyers have been given the benefit of an additional deduction of Rs. 50000 on home loan interest for loans not exceeding Rs. 35 lakh, where the value of the house is no more than Rs. 50 lakh. This will result in improved home buying sentiment in smaller cities with lower housing costs, such as Pune. An improvement in sentiment will also be seen in the cheaper far suburbs of the metros. However, this deduction is not sufficient to increase the sentiment much for first-time home buyers in the central parts of the metros like Mumbai, where housing prices are exceedingly high and such an exemption makes little to no difference in the burden on home buyers. The fact that the market indices took a nosedive immediately after the budget announcement more or less reflects the way sentiment in the housing sector has gone. However, if the RBI announces a cut in interest rates on the heels of the reduced fiscal deficit announced by the Finance Minister, it could be a day saver.” Arvind Jain, Managing Director, Pride Group, said: “Budget 2016-17 was far below expectations. Some leeway has been given to first-time home loan borrowers, but the relief will not boost demand in the metros. That said, service tax has been exempted for developers who are focused on constructing affordable housing with unit sizes not exceeding 30 square meters in the larger cities and 60 square meters in the smaller cities. This is a significant plus, and in line with the incumbent Government's intention to boost affordable housing. Allocation to MNREGA and irrigation activities have been stepped up, so it is logical to expect rural income to rise from this year onward. This can positively affect rural consumption story and boost the growth of smaller towns. Encouragingly, Rs. 1500 crore has been allocated for the moderation of land records in the Digital India campaign, which will definitely have a positive impact on transparency in the real estate sector. On the retail front, permitting seven days of operation for small and medium-sized shops in the unorganized retail segment will allow them to compete more effectively with malls. This will boost the demand for retail stores on high streets significantly. The plans to revive inoperational civil airports in partnership with their States with a rather small allocation of Rs. 100-150 crore per airport can have positive implications for the real estate development in these cities. It will boost infrastructure, and airports are also know influencers of demand for all categories for real estate. All in all, this budget was exceedingly cautious and not enough to infuse any significant doses of vibrancy into the real estate sector.” Getamber Anand, President – CREDAI National, said: “In this year’s Union Budget, our Finance Minister has taken the right steps to boost housing and ensure that 'Housing for All by 2022' becomes reality. CREDAI welcomes the announcement, on the supply front for Private sector's participation and housing for all by 100% income tax exemption on such houses besides the MAT 30 sq m in metros and 60 sq m in non-metros. This will encourage the private sector to reach these areas that accommodate about 90% of the shortage. 100% exemption will actually increase the IRRs on such ventures. On the enabling side to the home buyers, the increment of a deduction of INR 50,000 on the home loan for a house of INR 50 lakh is a very big attraction. Moreover, there will be a net to net saving of 50,000 rupees a year for such home buyers. Considering there has been a 100% exemption of service tax on such houses as well. The increase of deduction on rent paid on a house from Rs 24000 to Rs 60,000 will also result in a saving of about Rs 12,000 to Rs 13,000 a year. It is overall a very positive budget for the real estate sector and CREDAI is certain that this will spur the market and induce the home buyer who has been waiting ever since for some special incentives to actually be able to buy a house. Best part is that there is a timeline fixed for delivery of such affordable houses. All we ask for now is speeding up of the approval process as the whole project needs to be delivered in a time frame of about 3 years. So a single window clearance system of course would be a big enabler. Now the next task for CREDAI is to convince the state urban local bodies because by-laws are a state subject to increase the densities in their by-laws, to reframe the method of calculation of densities so that smaller units can be made in all projects. Another important point is the rationalization of the income tax act and small pain-points which existed earlier and were contrary on the government's claim of 'ease of doing business' such as excise on RMC which is for captive use, has been positively addressed. This shows the government's intent to actually make ease of doing business a reality. So rationalization of the entire tax act will also be a big boost to the sector to step up supply of affordable housing.” Vishal Gupta, MD, Ashiana Housing Ltd., said: “Ashiana Housing Ltd., have welcomed the budget as “balanced budget” it will trigger overall growth in rural areas and infrastructure development in particular. The budget would promote real estate sector, especially the affordable housing. An overall tax simplification has been provided for lot of us doing business here, adding that it gives incentives to the affordable housing by exempting from service tax houses upto 60 sq m. In a relief to common man, Mr Gupta said that the budget provides no Service Tax for houses built under 60 square metres, besides offering additional exemption of Rs. 50,000 for housing loans up to Rs. 35 lakh, provided cost of house is not above Rs. 50 lakh. This budget is going to boost the stressed housing sector, adding that exemptions provided on housing loan interest for first time home buyers is a great incentive to the real estate sector.” Ajay Nahar, MD, Nahar Projects and Partner, Nahar Group, said: “With 100 percent deduction of profits of undertakings from housing projects, the housing industry will see a rise in demand. India needs over 100 million houses in the near future which will help increase the demand for new homes especially the lower income group. Housing for all by 2022; is a great initiative as the urban areas and Tier II cities can now be easily accessible. This will help developers to build more houses and the reduced tax benefits will add to the benefits of new home buyers. Alternatively, this will also have a direct impact on volume of cement and steel to be consumed in this sector wherein developers seek to build more affordable housing for lower to mid income group households.  This initiative will also be a good move for individuals who opt for rental homes. Buying capacity of the middle income, upper middle and even the HNIs will increase due to less tax burden and the exemption on home loans for first time home buyers. With regards to the boost in infrastructure, Rs 2, 18,000 cr has been allotted for construction of new roads and railways. This will see more flyovers and better roads and connectivity options and hence this will have a direct impact on the housing sector, which is a positive sign. Developers can now look forward to building new homes in Tier II and Tier III cities and far suburbs which will increase the overall sentiment in the housing sector. The Goods and Services Tax Bill could be a game changer for the real estate industry addressing the problem of multiple taxation and bringing in transparency in the sector.” Rohit Poddar, Managing Director, Poddar Housing, said: “This government has finally walked the talk and has shown its seriousness for the affordable housing sector. The financial package they have announced will not only encourage but will also make new affordable housing projects financially viable. I welcome this long overdue move.” David Walker, Managing Director, SARE Homes, said: “Union Budget 2016-17 is a mixed bag for the real estate sector. We are pleased to see that the government has stuck to the 3.5 per cent fiscal target as this will give head room for the reduction in interest rates which will benefit all sectors of the economy and particularly the housing sector. The Finance Minister’s proposal that any distribution out of SPV income to REITs and INVITs with specified shareholding not being subject to Dividend Distribution Tax (DDT) will spur investments in REITs. The additional exemption of Rs 50,000 for housing loans up to Rs 35 lakh – provided the house cost does not exceed Rs 50 lakh – is welcome too.  Excise duty exemption on ready-mix concrete used in construction sites augurs well for the construction industry. While plans to meet the fiscal deficit targets are a good move, some of the key issues in the real estate sector have been given a skip. The real estate sector’s expectations of being accorded Industry and Infrastructure status have not been accepted. Furthermore, the fact that there was no mention about action being taken to expedite GST and the Real Estate Development Bill is disappointing.” Suresh Bhandari, President, ASHA 2022 by Essel Group, said: “We welcome Finance Minister’s decision of exempting Rs. 50,000 on housing loans up to Rs. 35 lakh, for the houses below Rs. 50 lakh. This long awaited move will provide needed boost to the lower and middle income group who are currently subjected to a maximum deduction of Rs 2 lakh on the interest payable on 'self-occupied' house, under the head 'Income from House Property'. Also, the immunity from service tax on housing upto 30mtrs in the metros and 60mtrs in other cities will further reduce the construction cost, thereby plummeting the prices in the affordable housing segment.” Rajesh Prajapati, MD, Prajapati Constructions, said: “The honourable Finance Minister has offered sops to the affordable housing front, and pointed out that there was a definite direction laid out in this budget towards implementing the ambitious Housing For All by 2022. 100% tax deduction to entities constructing 30 sq mtr houses in 4 metros n 60 sq mtrs in other areas is a major booster to the affordable housing sector. Also it is probably the first time that affordable housing has been defined in terms of size n not value of flat. It seems that the Housing Industry is finally being deservedly recognized as one of the major contributor to the GDP of the nation. The exemption of service tax on construction of houses up to 60 sq mtr is a welcome step. This will provide relief to a section of home buyers opting for 1RK / 1BHK / small 2BHK flats. Similarly, the additional deduction of Rs 50,000 on interest payment for first home buyers on house value of upto Rs 50 lakhs is a welcome step. However it will have limited impact as it leaves out a large section of home buyers in Metro cities. It would have been better if the Government would have extended this additional tax exemption for homes valued at Rs One crore for tax deductions in Metro cities. Going ahead, hope that the commercial / office and retail market will benefit from REIT as tax exemption from DDT to SPVs as well as Funds will give a boost to these funds and facilitate easy flow of much needed funds.” Rohit Gera, Managing Director, Gera Developments & VP, CREDAI – Pune Metro, said: “Given the challenging economic conditions, the Finance Minister has done a remarkable job. Showing a clear road map for farmers to double their income in 5 years, focus on infrastructure, capitalization of banks as well as reducing tax terrorism are welcome steps. Government has given a major push to infrastructure in this budget by allocating huge funds for the road and rail sector. Announcement on development of new greenfield airports, revival of undeserved airports, highway upgradation, bringing stalled road projects back on track and constructing more rural roads will give much needed boost to the realty sector and put the smart cities initiative on a fast track. On the subject of housing, there are a number of measures addressed toward the consumer as well as the industry with a view to address the housing shortage in the country. The consumers are benefitted with greater interest deduction for first home buyers, as well as an enhanced deduction from Rs. 24000 to Rs. 60000 for rent paid where there is no HRA provision. For the industry, the objectives of meeting the housing shortfall are unlikely to be met for a number of reasons. First being that the project has to be completed within 3 years with the Occupancy Certificate (OC). Given the time, the OC takes leaves about 30 months to complete the project. When combined with the clause that the project must consume 80% or 90% of the FAR, means the projects will only be small sized so as to meet the time line criteria. Secondly, the bill says the scheme is applicable to the cities of Mumbai Delhi, Kolkata and Chennai and 25 km around these. However, for all other areas it is applicable only to the municipal or cantonment jurisdictions. This means areas outside the municipal limits are excluded from the scheme.  It is likely that this is a drafting error as the letter doesn't match the spirit, but as written the scheme will not make a major impact.” Venkatesh Gopalkrishnan, President and CIO, Shapoorji Pallonji Real Estate, said: “The Exemptions provided on housing loan interest for first time home buyers and affordable housing would provide a boost to the stressed residential sectors and is likely to spur supply of affordable homes demand. Scrapping of dividend distribution tax on Real Estate Investment Trusts (REITs) would help developers to raise funds, as this makes investments attractive for investors.  It is considered to be one of the biggest hurdles left in making REITs financially viable for Indian commercial stakeholders. With most of the hurdles getting removed, we may see introduction of REITs in the Indian market soon. Also, the move to provide 100 percent deduction for profits to an undertaking from a housing project for flats upto 30 sq m in four metro cities and 60 sq under certain conditions will provide the necessary motivation for developers to develop good quality affordable houses thus catering to the large demand in this segment. The government's service tax exemption on houses less than 60 sq m, and the additional exemption of Rs 50,000 for housing loans up to Rs 35 lakhs for homes not above Rs 50 lakhs will both likely improve first-time home buyers' sentiment.” J.C. Sharma, Vice Chairman & Managing Director, Sobha Limited., said: “We welcome some of the realty sector specific proposals.

1. The 100% deduction for profits to an undertaking in housing project for flats up to 30 sq. metres in 4 metros and 60 sq. metres in other cities approved during June 2016 to March 2019 and completed in 3 years will encourage supply in the affordable housing segment. This is subject to Minimum Alternate Tax.
2. The proposal that distribution made out of income of SPV to the REIT and Infrastructure Investment Trusts (INVITs) having specified shareholding will not be subjected to Dividend Distribution Tax (DDT), in respect of dividend distributed after the specified date, is a progressive step. This step is likely to promote REIT and attract new investments
3. Another good step is the deduction for additional interests of Rs. 50,000 per annum for loans up to Rs. 35 lakhs sanctioned in 2016-17 to first time home buyers, where the cost of the house itself does not exceed Rs. 50 lakh. This is directly beneficial for both buyers and sellers and will perk up the market sentiments.
4. The exemption from service tax on construction of affordable houses up to 60 sq. metres under any scheme of the Central or State Government including PPP Schemes is another step in the right direction.
5. Exemption for rent paid goes up from Rs. 24,000 to Rs. 60,000 which will augur well for the rental segment of the housing sector.
6. Furthermore, the excise duty exemption presently available to concrete mix manufactured at the site for use in construction work to ready-mix concrete is a welcome move for the industry.
7. The Budget proposal to digitize land records is in the right direction which will render land records free from encumbrances.

We hope all these will help give the much needed fillip to the housing sector.” Kashi Nath Shukla, Chairman Managing Director, Tashee Group, said: "The government has finally realized that ease of doing business has to become realism to spruce up the GDP. The government's service tax exclusion on houses less than 60 sq m, and the added exemption of Rs 50,000 for housing loans up to Rs 35 lakhs for residence not higher than Rs 50 lakhs will together expected to progress for the first-time home buyers feeling which will further give confidence to the buyers to spend more in this segment. Also the freedom for affordable housing projects would bring in a 15-20% benefit on profits after giving the MAT tax and for a real estate developer building up such a project would make it easier to draw foreign and domestic investment for housing projects." Navin Makhija, Managing Director, The Wadhwa group, said: “The real estate industry, which had pinned high hopes on Union Budget 2016 for revival has welcomed this proposal. The budget’s direction is positive with several macro factors making way for a better economic regime. The proposal to provide additional exemption of Rs. 50,000 for housing loans up to Rs. 35 lakh is quite optimistic. However, few more amendments in the residential housing sector would have worked out better for the sector. But we hope there is a strong reinforcement in the real estate industry this year.” Manju Yagnik, Vice Chairperson, Nahar Group, said: “We welcome the Finance Minister Mr. Arun Jaitley’s Budget 2016 presentation today which is a positive budget over all. This will give boost to the economy in long run as it focuses on the expenditure rather than giving direct rebates. This budget as expected proposes to give a larger thrust to affordable and low cost housing, for buyers and for developers alike, bringing relief to the low income group and mid segment of home buyers, who constitute the bulk of housing demand in India. This has the potential to spearhead growth of the ancillary industries allied to realty sector, increasing job opportunities, thus creating a positive sentiment for the overall housing sector. The proposal of 100% deduction to undertakings for construction of affordable housing will give a boost to affordable housing segment in the country. No service tax for houses built less than 60 sq. meters in non-metro and 30 sq. mt. in metro is a good move as it will promote housing catering to the middle class who comprise the largest segment of home buyers in the country. Exemptions provided on housing loan interest for first time home buyers and affordable housing will bring little relief for the residential property market in metro cities where there is maximum demand. Scrapping of dividend distribution tax on Real Estate Investment Trusts (REITs) would help developers to raise funds, as this makes investments attractive for investors. Rental housing will get a boost as those living in rented houses will get a deduction benefit from Rs 24,000 to Rs 60,000 under Section 88G. First home buyers can avail an additional exemption of housing loan interest of 50,000 provided value of house does not exceed Rs 50 lakh comes a blessing for mid housing segment of home buyers. The Finance Minister’s assurance to pursue implementation of GST, reform measures pending before parliament has raised our hopes as this was one of our budget expectations from the Finance Minister. Overall, as compared to the previous two budgets, this budget has been reasonably good taking into account some of the sector’s requirement though not entirely. We would be happy if the government would make a mention of our other demands such conferring industry status, single window clearance, subsidized land rates etc.” R?.? K Arora, Chairman, Supertech, said: The Union Budget 2016 is a disappointing one for the industry in general and particularly for Real Estate Sector which was pinning great expectations on it.  The only significant relief announced in the Budget for real estate, is exemption of Rs. 50,000/- for housing loans upto Rs. 35 lakhs and that too on houses costing upto Rs. 50 lakhs.  This nominal relief  is available to a very few and not to large section of home buyers as the cost of houses has gone beyond Rs. 50 lacs. Another relief the Finance Minister announced in the Budget is service tax exemption for housing construction of houses less than 60 sq. mtrs. which too is inadequate and would not be available to large section of  home buyers buying 2 BHK and above flats. The announcement of 100 per cent deduction for profits to an undertaking in housing project for flats upto 30 sq. metres in four metro cities and 60 sq. metres in other cities, approved during June 2016 to March 2019 and completed in three years makes it  mandatory to obtain all clearances and complete the project in 3 years.  Further,  the developer is liable to pay MAT also. Further, the addition of 0.5% Krishi Kalyan Cess on all services would cause additional burden on home buyers who are already burdened with increase in local stamp duties and sector rate increases in addition to cost escalation.  None of the grievances of real estate sector for providing bank finance has been addressed in the budget and the Real Estate is made entirely dependant on high cost finances.  There is also no proposal to encourage investment in real estate. Aman Singh Gehlot, Director, Ambience Group, said: “The union budget 2016 has allowed 100% deduction for profits to an undertaking from a housing project for flats upto 30 sq. metres in four metro cities and 60 sq. metres in other cities. This shows the government’s commitment towards its promise to provide housing for all by 2022. Other proposals in the budget like additional exemption of Rs. 50,000 on housing loans upto Rs. 35 lakh for purchase of houses costing upto 50 Lakh, service tax exemption for first time home buyers and the focus on affordable housing are likely to lift buyer sentiment in the real estate sector and give a much needed boost to sales of housing units. The Budget has also made investing in real estate sector attractive once again by scrapping dividend distribution tax (DDT) component for Real Estate Investment Trusts (REITs). This will make REITs an attractive investment option and allow developers to monetize their projects.” Chintan Sheth, Director, Sheth Corp., said: “The budget 2016 was supposed to be a very crucial affair for the realty market. There were huge expectations from the Finance Minister Mr Arun Jaitley but the result was a mixed-bag if the real estate industry was considered. The first positive from the budget was the exemption of DDT (Dividend Distribution Tax) from REITs. The DDT which is currently 15% was a major obstruction for the investment in REITs. Now we can expect a major chunk of investments flowing in the sector. The other good thing in the budget was that the Service tax has been exempted for housing construction of houses less than 60 square metre i.e 645 square feet approx. This will help buyers who already had additional burden on them with various taxes. Also the First home buyers will get an additional deduction of interest of 50,000 provided value of house does not exceed Rs 50 lakh. The Finance Ministry has proposed 100% deduction to undertakings for construction of affordable housing. These initiatives will boost the affordable housing segment and will help in Government’s mission of “Housing for All”. The Finance Ministry would pursue the implementation of GST before the Parliament. Introduction of GST will help in curbing multiple taxes which is a positive sign for the industry and result in buyers coming forward to buy property. Though there were few good announcements to be mentioned, but the major ones were overlooked. The single window clearance has not been taken into consideration. There is not a proper roadmap for the real estate bill which was the most awaited and discussed topic last year. The bill will boost the entire industry and will definitely prove to be a game changer for the market. The impact of this bill will be profitable to both consumers as well as builders as it will bring transparency in the industry and confidence amongst buyers.” Prashant Solomon, Managing Director, Chintels India Ltd., said: “Union Budget 2016 is comprehensive and well-rounded with some positive initiatives for the real estate sector. 100% deduction for profits to an undertaking from a housing project for flats upto 30 sq. metres in four metro cities and 60 sq. metres in other cities will benefit developers in the low-cost housing space. Deduction for additional interest of Rs. 50,000 per annum for loans up to Rs. 35 lakh for houses under Rs. 50 lakh will encourage low-end buyers to invest in property. Excise duty exemption on Ready Mix Concrete (RMC) will lower the cost for housing construction and, in turn, encourage builders to pass on the benefits to home buyers. Overall, we expected Finance Minister to be more aggressive for the real estate sector during this budget regarding issues like industry status and single window clearance.” Anubhav Jain, Director, Silverglades, said: “While it’s a pro-poor and pro-growth Budget, there have been no major announcements for the real estate sector. Developers were looking forward to credit break and single-window clearance for projects, which the govt has failed to announce. On the other hand, additional tax deduction of Rs 50,000 for houses up to Rs 50 lakh and no excise on RMC for self-consumption are positive initiatives to encourage affordable home buyers and  developers.” Amit Modi, Director ABA Corp and Vice President CREDAI Western UP, said: “We have to say that though the Union Budget 2016 has been great on infrastructure, same is the not the case when it comes of Real Estate and Housing! The Rs Rs 97,000 crore for road construction was indeed the need of hours, we would have liked the government to announce long pending demand of  Single Window Clearance for Real Estate Projects to bring in more transparency and Industry Status to Real Estate Sector to avail legal low cost funding were completely ignore since both these initiatives would been achieved without putting burden on the budgetary allocation. While we welcome the announced interest rebate of Rs 50,000 for first time home loans if the value of homes does not exceed of Rs 50 lakhs but would’ve like the ticket size to increased to at least Rs 1 crore since the average apartment cost in cities like Delhi and Mumbai are a lot more than Rs 50 lakhs, hence an extremely small segment of first time home buyers will be able to benefit from this initiative. Similar is the case with Service Tax exemption on housing construction of houses less that 60sq ms in the cities. The proposed 100% deduction for profits of undertakings from housing projects during June 2016 – March 2019 since the stipulated timeline of 3 years is impractical since realistically speaking it takes at least 5 years for a housing project to be delivered. But since big infrastructure projects always bring in huge economic multiplier effect for the whole country, both in terms of employment generation and for the ancillary industries we feel that it’s a good budget with a lot more room for improvement.” Ashish Puravankara, Managing Director, Puravankara Projects Ltd, said: “The Budget has announced 100% profit deduction of the SPV which builds Affordable Housing for 3 years, meeting the following criteria :

• Upto 30 sqmeters in 4 metros
• Upto 60 sqmeters in other metros

For the first time home buyers, loans upto Rs 35 lacs and the flat cost not exceeding 50 lacs, the home loan interest deduction gets enhanced by an additional 50,000. These are welcome moves, we are awaiting the fine print and how the same gets translated on the ground, for the Industry and our Provident brand.” Abhishek Lodha, Managing Director, Lodha Group, said: “It is a thoughtful Budget, which has taken into account realities of global and Indian conditions. The focus on rural economy will help rekindle demand in rural India and enable stronger, more sustainable economic growth for the entire country. At the same time, the finance minister's idea to retain a fiscal deficit target of 3.5% is commendable. It will not only enhance India’s credibility amongst the global investor community but also open doors for the RBI to consider lowering interest rates. The focus on affordable housing will give much-needed impetus to develop greater number of affordable housing projects across the country, thus, directly aligning the agenda with the prime minister’s vision of ‘Housing for All’. Increasing the limits on interest deduction on homes costing less than Rs 50 lakh and removing the Dividend Distribution Tax on REITs, both are welcome measures which will help boost the attractiveness of India's housing sector. We welcome the Budget and think that it will pave the way for India to continue being the fastest growing major economy in the world.” Pradeep Jain, Chairman, Parsvnath Developers Limited, said: The Hon’ble finance minister has presented an excellent Union Budget .The Union Budget has focused on rural development, large infrastructure development in order to spur economic growth of the country and to come at par with global infrastructure. The budget did bring cheer for common man with an increase in the HRA tax relief from Rs 24,000 to Rs 60,000 that would immensely benefit those living in rented houses. Besides this the proposal of giving deduction for additional interest of Rs 50,000 per annum for loans up to Rs 35 lakh (provided the value of the house does not exceed Rs 50 lakh) to the first time home buyers along with other exemptions would provide boost to the affordable housing segment. On the other hand, 100% exemption of profit for developers and exemption from service tax for construction of houses less than 60 sq. meters will encourage supply in the affordable housing segment and would be instrumental in achieving the vision of hon’ble Prime Minister’s ‘Housing for all’ scheme. Also scrapping of dividend distribution tax on Real Estate Investment Trusts (REITs) would make investments attractive for global investors in the real estate sector. Having said that I would like to emphasize that the real estate sector was expecting focus on the sector but it seemed that hon’ble minister overlooked the pain of real estate developers. The real estate sector is traversing through a very tough time and  we hope that hon’ble finance minister will consider the requirements of the sector to enhance liquidity and other concerns  including private funding to real estate sector and easing of home mortgage loans Besides specifics on real estate sector I  would also like to make a special mention regarding the proposed Dispute Resolution Scheme (DRS) aimed at reducing litigation and providing certainty in taxation. There are about 3 lakh tax cases pending with the 1st Appellate Authority with disputed amount 30 being 5.5 lakh crores and under this proposed scheme the government aims at reducing this number substantially thereby  creating an environment of transparency and build trust amongst taxpayers. Gaurav Gupta, General Secretary, CREDAI RNE said: “The budget is a balanced and a growth oriented budget. Strong Push has been given to affordable housing by incentivizing developers of 100% Income Tax exemption on construction of houses up to 30 sq. meters in metros and 60 sq. meters in non metros. With a proposal of zero service tax on this, it will go a long way in creating enough housing stock where demand actual exists. Developers too will be motivated to construct as Income tax exemption is a must in thin margin affordable housing projects. By introducing an additional deduction of Rs 50,000 on interest for loan up to Rs 35 lakh, Finance Minister has given some reason to cheer to the first time home buyers. A major relief is that no excise will be levied on RMC produced at the construction site. Demand for industry status, raising limit on Interest repayment from 2 lacs to 4 lacs remain unheard which was looked upon with high hopes from the entire sector.”? Manoj Gaur, President CREDAI NCR, said: “Union budget 2016 has focused on some key issues which is positive for real estate sector. In some major declarations made in the budget regarding affordable housing, it is clear that government is keen to give a boost to affordable housing segment, being also in lined with government’s initiative to provide housing to all by 2022.  100% Service tax exemption has been given to make houses up to 30 sq mtr in 4 metros and up to 60 sq mtr in others. We believe that his policy for affordable segment will benefit the home buyers, especially the middle and lower income group. Increased tax rebate to 60000 will benefit those living in rented houses in a big way. Certain issues related to direct and indirect taxes have been addressed which is good. The biggest disappointment was that the real estate did not get the infrastructure status which was long pending demand of this sector.”? Deepak Kapoor, President CREDAI Western U.P. said: “The budget has brought relief to the housing sector; however, overall expectations of the realty sector were high which have not been met. In a move to boost the housing demand, deduction of Rs 50000 has been given on a loan of up to 35 lakhs. There has been allocation of funds for infrastructure development which includes construction of road networks and setting up of 300 urban clusters. Affordable housing has been given a fair share. This would kick start the real estate in Tier 1 and Tier 2 cities along with new mushrooming areas in major cities as well. Direct Dividend Tax (DDT) is now exempt from REITS. This was very much required to make REITS efficiently functional. Much to our disappointment, Industry status and single window clearance system could have been the biggest game changing reforms for real estate sector which were not even mentioned in the budget. Sanjay Rastogi, Director Saviour Builders Pvt. Ltd., said: “With a fiscal deficit target of 3.5 %, government had come up with a very growth oriented and a balanced budget which may fetch positive results in long run. There have been some major announcements for Realty sector which are good for both customers as well as developer community. Our long pending demand for Real estate regulator and single window approval has not been addressed which is quiet disappointing. But, the move to improve the affordable housing segment through tax exemptions is commendable. Rent-givers have also increased tax exemption limit of Rs 60000 which was earlier subjected to Rs 20000 only. Furthermore, infrastructure development has been assigned a decent amount which eventually will benefit real estate.” Om Chaudhry, Founder & CEO of FIRE Capital and Chairman & CEO of Astrum Value Homes, said: “We had lot of hopes from the budget, some of which have been fulfilled while others remain unmet. On the whole, the demands of real estate sector have not been fully met and budget has fallen short on our expectations. There have been some important subjects which have been touched by the government satisfactorily. Affordable housing has been addressed suitably by giving 100% deduction to entities to make houses up to 30 sq mtr in 4 metros and up to 60 sq mtr in others. First-time home buyers will now be getting an additional deduction of Rs 50,000 on interest for loan upto Rs 35 lakh where the cost of house should not exceed Rs 50 lakh. Such steps will boost the housing demand and will reduce the burden on the pockets of home buyers. No clarity on implementation of GST and RERA bill is again a setback for the sector.” Anil Kumar Tulsiani, CMD, Tulsiani Constructions & Developers Pvt. Ltd., said: “There have been some important declarations in the budget for real estate sector but many of our demands still remain pending. Industry status, GST & RERA bill, single window clearance system were looked upon with high hopes from the entire sector but have not been fulfilled. Well-thought decisions on affordable housing have been taken to boost the demand in this segment. Announcement to set 300 rurban clusters under Shyama Prasad Mukherji Rurban Mission and allocation of funds for infrastructural development are other positive reforms for realty sector.” Neeraj Gulati, MD, Assotech Realty Pvt Ltd, said: “The announcements in the budget are focussed on the affordable housing segment with emphasis on private public participation. The deduction of Rs 50,000 on the interests to be paid by first-time home owners on a loan of Rs 35 lakhs for a ticket price of not more than Rs 50 lakhs will lead to a rise in demand for mid-income and affordable housing segment. Secondly, the announcement of 100% deduction on profits for those developers undertaking affordable housing projects in metros and other areas and the proposal for service tax exemption on construction of affordable houses up to 60 sq.m. under Central and Sate Government schemes will provide direct boost to the Government’s intent to get more private developers in the affordable housing segment.” Pradeep Aggarwal, Chairman, Signature Global Group, said: "It is very heartening to see how the government has started recognising 'Affordable Housing' as a separate vertical. This is the first time affordable housing has been defined in terms of the size of a unit and not on the basis of unit price. It reflects the intent of the government and its seriousness towards 'Housing for All by 2022'. The government has exempted service tax on construction of houses up to 60 sq. mtr. This is a remarkable step and will give much-needed direction to affordable housing. To add to it, the government has also raised tax exemption up to Rs 50,000 on first-time interest on loan amount up to Rs 35 lakh, provided the cost price of housing unit not to exceed Rs 50 lakh. It is a dual benefit for first time home buyers. This will motivate the 'fence-sitters' to make their final decisions. Affordable housing is the need of the hour and the government has started realising this. The tax exemption on interest rates could have been raised to a little further, but non-the-less, we are sure that the government shall pass the much-awaited Real Estate Regulatory Bill as well. The proposed Bill shall take care of rest of the things. We thank Hon. Finance Minister Shri Arun Jaitley for giving due attention to the real estate sector and reinstigating hopes among the home buyers and the developers at large." Snehdeep Aggarwal, Founder and Chairman, Bhartiya Group, said: “The Finance Minister has rightly focused on housing construction as an important part of the economy. We are enthused by the steps taken for promoting affordable housing. Tax breaks for companies making homes of less than 30 sq m in the four metros and 60 sq m in other cities are welcome. Similarly, to ease construction, ready mix concrete being exempted from excise is a very laudable step. Doing away with service tax for homes up to 60 sq m is going to help the end user and create more demand.”