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.