Budget 2018 : Real Estate Sector & Real Changes For Affordable Housing

For "Housing for All" the government announced that it would establish a dedicated Affordable Housing Fund out of fully serviced government bonds. This would bridge the funding gap and provide an access to alternative, rather than cheaper source of funds.

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Budget 2018 : Real Estate Sector & Real Changes For Affordable Housing

Real changes for “Housing for All” the government announced that it would establish a dedicated Affordable Housing Fund out of fully serviced government bonds. This would bridge the funding gap and provide an access to alternative, rather than cheaper source of funds. The government also displayed its commitment in providing houses for the poor by sanctioning PMAY scheme substantially in rural areas.

Read Also: 25,000 Crore Extra Budgetary Resources For Implementation Of PMAY: MoHUA

Certain players had taken the plunge into affordable housing projects without any special tax concessions. However, these projects could not reap the benefits of tax holidays under affordable housing project scheme due to a fixed advent date of June 1, 2016. An inclusion of such projects in the affordable housing tax regime would have provided what is rightfully theirs.

The real estate transactions have been facing undue hardship due to higher stamp duty value. The parties to the transaction were suffering tax on difference between the transaction value and stamp duty value of the properties. Taking notice of this, the government granted a 5% safe harbour in this regard. This, at least, indicates that the government is aware of the hurdles faced by the real estate sector. However, the real estate players may not be sufficiently pleased with the meagre 5% leeway.

Read Also: Government Budget 2018-19 Continued It’s Thrust For Affordable Housing

The tax introduced last year on notional rent for unsold inventory came across as a cost burden for developers, having ripple effect in the cost to the final consumers. Retraction of this tax could have much desired correction in the pricing.

The government had provided clarity on the tax impact on JDA partially last year, covering Individual and HUFs. However, a complete rationalization (impact for all categories of land owner) could have been brought in this budget.

Read Also: Dedicated Fund For Affordable Housing In Union Budget 2018

Taking away the exemption on LTCG tax for units of REIT, we are moving farther away from the reality of REIT. The growth rate of real estate sector has been on decline since past 3 to 4 years. As per NHB’s RESIDEX Index, housing prices have been increasing in 72% of major 50 cities. The recent inclusion of TDR within the GST net would only worsen the sentiments of the sector.

Source Link- http://www.businesstoday.in/.

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