Union Budget 2016: Boost for realty now

This is the best Union Budget as far as housing and real estate sectors are concerned. In fact, we have not seen such an encouraging budget for these sectors in recent years and I wholeheartedly thank Arun Jaitley Ji for this. This budget scores 9/10 in the affordable housing initiative, which is still a relatively new and unexplored segment.

He has taken concrete steps to boost the housing sector to make Narendra Modi’s vision of “Housing for All by 2022” a reality.

These sops will be applicable to the LIG section having annual incomes of less than '6 lakh and wanting to buy 60 sq. m houses (850 sq. ft) and the EWS section having an annual income of less than Rs 3 lakh and wanting to purchase 30 sq. m house (425 sq. ft). There will be no risks involved for anyone to implement these sops since the beneficiaries will be identified in advance.

The tax sops proposed by him for first-time home buyers and incentives for affordable housing projects will give a fillip to the sluggish property market and enable people from lower and middle income groups to realise their dream of owning a house.

However, one major drawback in the budget was that the long pending demand to provide industry and infrastructure status to the realty sector was ignored.

But, the proposal on exempting REITS from dividend distribution tax is welcome.

The proposal to extend an additional Rs 50,000 deduction on interest on loans for first-time home buyers and 100 per cent deduction for profit on development of affordable housing will also spur the market.

The budget will boost both housing demand and supply since 90 per cent of the housing demand is in the affordable segment. People from lower and middle income groups have been waiting for years for these sops so that they can own a house.

The NDA government has acknowledged the fact that for every Rs 1 incentive given to real estate sector, it will earn Rs 5 since a boom in the property market will give a fillip to 250-odd allied industries and sectors involved with construction activity by providing employment to lakhs of people.

Additional exemption of Rs 50,000 for houses costing below Rs 50 lakh will help bring in first-time buyers to the market.

The realty sector will see a lot of traction in the affordable housing space thanks to this budget. The major positive impact will be felt in Tier-II and Tier-II cities due to the tax sops given in the budget.

The proposal on increasing tax deduction limit to Rs 60,000 per annum from the current Rs 24,000 on house rent will enable people living in rented houses to purchase their own houses. They can invest the amount saved on rents to pay EMIs of their own houses.

The writer is past national president and office bearer, Credai