The Union Budget 2017-18 has steered the real estate sector in a positive direction through the pro-homebuyer announcements shared by Finance Minister, Arun Jaitley. The FM not only introduced pioneering measures to boost affordable housing, but he also focused immensely on the buying capacity of the salaried class, infrastructure development across urban and rural settlements and eased norms on capital gains arising from the sale of an immovable property.
Here are the top 5 reforms introduced in Budget 2017 that are touted to be the biggest takeaways for the real estate sector –
- Boost to affordable housing – Declared as ‘Infrastructure’, affordable housing stands to be the biggest gainer this year. The development is a direct answer to every question posed on the viability of constructing affordable homes in the country. Giving a huge relief to its developers, the government now allows these projects to be completed within 5 years instead of three years in order to avail benefits under 80IB. Moreover, consideration of carpet area instead of the built-up area is a major breakthrough in the segment as it will effectively increase the unit size by 30 percent.
- Rural Housing – Modi government’s aim to house every individual by 2022 has accelerated further with reforms introduced under rural housing. The Finance Minister declared completion of 1 crore houses by 2019 for those dwelling in Kachha houses. Moreover, the allocation of Rs 23,000 crore under the Pradhan Mantri Awas Yojna (PMAY) is a massive step towards “Housing for All” Mission. In addition, the FM announced several schemes and allocated hefty funds for development of infrastructure and enhancement of job opportunities in rural areas.
- Boost to infrastructure sector – The infrastructure sector, which would invariably impact real estate, was awarded a whopping Rs 3.9 lakh crore. The transport sector including railways, road, and shipping alone grabbed Rs 2.41 lakh crore, while the allocation for national highways has been stepped up to Rs 64,000 crore from Rs 57,676 crore.
- Easing norms on capital gains – Another ground-breaking move for real estate enthusiasts is the reform brought in the capital gains tax structure. The holding period for long-term gains from an immovable property has been reduced from three years to two years. Respite has also been provided in the notional rental income for property for a year. Moreover, for a property being developed under Joint Development, one is now liable to pay capital gains tax only in the year of completion.
- Reforms to boost disposable income – The provisions provided under the Income Tax slabs will also have a direct bearing on the real estate sector. The FM has attempted to ease tax liabilities on the salaried individuals, resulting in a thrust to the disposal income at hand.