Affordable housing scheme gets boost in Budget 2017

The real estate sector, which was badly hit post Prime Minister Narendra Modi’s demonetization, feels its ‘Achhe Din’ are back with Union finance minister Arun Jaitley assuring 100 per cent incentives to builders undertaking affordable housing schemes.

As per Jaitley’s budget announcement, people will be able to buy houses with carpet area of 30 sq metres (approx. 322 sqft) in cities like Bengaluru at affordable prices. “Pradhan Mantri Awas Yojna embodies the assurance of the government to address the housing needs of all and more specifically the poor, in a time-bound manner.

Construction of houses creates considerable employment opportunities as well. In order to fuel activity in the housing sector, I propose to give 100 per cent deduction for profits to an undertaking from a housing project for flats up to 30 sq metres in four metro cities and 60 sq metres (645 Sq feet) in other cities which are approved during June 2016 to March 2019, and is completed within three years of the approval,” he said in his budget address.

However, despite the incentives announced in the Union budget, builders feels that there is more to be done on the government’s part, like ensuring speedy approval of projects.

Irfan Razack, president of Confederation of Real Estate Developers’ Associations of India (CREDAI), while welcoming the budget announcement, told media: “In a city like Bengaluru, the civic agency should take up real estate related issues on a priority basis. There are no speedy approvals and officers are sitting on the files. It is unfortunate that despite everything up to the mark, the files are kept pending. If approvals are given in due time then the projects can also be completed.

The buyers will also get benefits at the right time.”

He said, “Finally, the government understands that there is a need to support affordable housing. Granting infrastructure status to affordable housing will give the developer operating in this segment access to more funds from the banks. If affordable housing comes under the infrastructure status, a lot more funds will become available for this sector. Additionally, the cost of finance will be much lower, which would help us build better products at a reasonable price.”

Capital and gains
Razack said the holding period for capital gains has been reduced from three years to two years, which is a big win. “Since the government is looking at eliminating black money completely from real estate, this would go a long way in encouraging land transactions with 100 per cent cheque payments.

Om Ahuja, CEO of Brigade Group (residential projects) said taxation applicability in joint development deals after completion of project would help improve the industry business dynamics. “The new proposal of presumptive taxation on affordable housing’s unsold units’ tax applicability after one year of reviving occupancy certificate would help the industry look at affordable housing seriously,” he said.

The extended time horizon for project completion from three years to five years to avail tax benefits for developer would also help more builders look at this segment seriously. Increasing the area of affordable housing from 30 sq mt and 60 sq mt “built-up area” to 30 sq mt and 60 sq mt “carpet area” will bring logical meaning to the consumers seeking affordable housing by providing them 25-30 per cent more of space in their flats, Ahuja said.

How buyer will get benefit
First-time home buyers will get deduction for additional interest of Rs 50,000 per annum for loans up to Rs 35 lakh. But flat value should not exceed Rs 50 lakh

Credits Bangalore Mirror

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