The recent budget of 2015-16 announced by Finance Minister Arun Jaitley has sparked controversy in the realty sector. Although need for smarter cities and growth of infrastructure is stressed, direct provisions to boost real estate are missing in the budget. Scrapping of the, ‘100 smart cities’ plan, in particular has been a blow to the real estate sector.
Budget 2015-16: What This Means for You - The Buyer
The budget comprises many positives and negatives. Many changes and additions are expected in the coming year. However, the following drawbacks and benefits can be accrued from the budget:
Budget 2015-16: The Downside
• The increase of service tax from 12% to 14% will reduce the purchasing power of the middle class home buyer, greatly affecting the sector.
• Several long-standing demands of the real estate sector have not been dealt with. The budget has yet again failed to initiate the removal of DDT and MAT in SEZs. It has also not paid any heed to the reinstating of the low cost housing Section 80-IB.
Budget 2015-16: The Upside
• An important point announced during the Budget was the ‘Housing for All by 2022’ mission. The goal set is to create 6 crore housing units across the country. This mission is sure to help the real estate sector grow.
• Wealth tax has been restricted to the super rich. A surcharge of 2% will be levied on those with an annual income of Rs. 1 crore and higher. Without tax levied on property ownership each year, people will now start considering long term investments in homes. A surge in purchase of low to mid-level homes is expected.
• In the near future, listing of the Real Estate Investment Trusts (REITs) will be mandatory while the capital gains taxes will be abolished. Implementation of both will take place in the year 2015-16.
With impetus to the REIT market, one can hope for greater liquidity of cash, which will lead to growth of infrastructure in urban cities.
• Corporate tax has also been lowered by 5%, which should help increase FDI (Foreign Direct Investment) as well as local investment. With the current Budget, overall growth of real estate along with many other sectors is expected. Many indirect provisions have been incorporated, which should help in the advancement of the sector. However, lack of provisions directly related to the real estate sector will impede its growth. As a whole, the real estate sector is in anticipation of some positive strides to be taken as the year progresses. Hopefully, some changes will occur that will motivate buyers and boost real estate sales.
Budget 2015-16: What This Means for You - The Buyer
The budget comprises many positives and negatives. Many changes and additions are expected in the coming year. However, the following drawbacks and benefits can be accrued from the budget:
Budget 2015-16: The Downside
• The increase of service tax from 12% to 14% will reduce the purchasing power of the middle class home buyer, greatly affecting the sector.
• Several long-standing demands of the real estate sector have not been dealt with. The budget has yet again failed to initiate the removal of DDT and MAT in SEZs. It has also not paid any heed to the reinstating of the low cost housing Section 80-IB.
Budget 2015-16: The Upside
• An important point announced during the Budget was the ‘Housing for All by 2022’ mission. The goal set is to create 6 crore housing units across the country. This mission is sure to help the real estate sector grow.
• Wealth tax has been restricted to the super rich. A surcharge of 2% will be levied on those with an annual income of Rs. 1 crore and higher. Without tax levied on property ownership each year, people will now start considering long term investments in homes. A surge in purchase of low to mid-level homes is expected.
• In the near future, listing of the Real Estate Investment Trusts (REITs) will be mandatory while the capital gains taxes will be abolished. Implementation of both will take place in the year 2015-16.
With impetus to the REIT market, one can hope for greater liquidity of cash, which will lead to growth of infrastructure in urban cities.
• Corporate tax has also been lowered by 5%, which should help increase FDI (Foreign Direct Investment) as well as local investment. With the current Budget, overall growth of real estate along with many other sectors is expected. Many indirect provisions have been incorporated, which should help in the advancement of the sector. However, lack of provisions directly related to the real estate sector will impede its growth. As a whole, the real estate sector is in anticipation of some positive strides to be taken as the year progresses. Hopefully, some changes will occur that will motivate buyers and boost real estate sales.
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