A mixed bag of reactions by realtors on Interim Budget 2019

NEW DELHI: Presented by the interim finance minister Piyush Goyal in Parliament today, the interim Union Budget 2019-20 has much to offer to the real sector. From lending a stronger back to the middle-class section of the country to providing some relief to the real estate developer the interim budget came with plenty of perks to offer to everyone.

The major steps taken to provide impetus to the sector include; A full tax rebate to the individual taxpayers having taxable annual income up to ` 5 lakhs, Exemption on levy of income tax on notional rent on a second self-occupied house, the Income Tax Act will be increased from investment in one residential house to two residential houses for a taxpayer having capital gains up to ` 2 crore, and the exemption of income tax on notional rent from unsold houses to the next 2 years.

On the principal steps taken by the government in the interim budget, here’s what the realty major have to say to about it:

Manoj Gaur, MD, Gaurs Group & VP, CREDAI National
“The move to increase income tax slab to 5 lacs is a very positive move. This is a helpful step towards increasing disposable income for an individual. Also, a home buyer preferring to buy a home in luxury segment, will be benefited with the rollover of capital gains under section 54 of the Income Tax Act.The move will further increase investments in luxury segment thus giving a positive push to the real estate sector.

Pradeep Aggarwal, Co-Founder & Chairman, Signature Global and Chairman, National Council on Affordable Housing, ASSOCHAM
“The extension of tenure of registration of projects under affordable housing segment till March 31, 2020 under section 80 -1BA will now further boost the affordable housing segment thus giving relief to builders developing projects under this segment. Deduction of 100 per cent of profits derived from the development of affordable housing projects that have been approved on or after 1st June 2016 is a motivational step for the developers to focus on affordable housing segment thus speeding up the mission of ‘Housing For All 2022.”

Rs 1 Lakh Crore Granted For Affordable Housing Days before Budget to boost affordable housing and achieve the vision of Housing for All by 2022, the government (Centre and State) have undertaken several initiatives, such as Pradhan Mantri Awas Yojana (PMAY) that aims to build 1 crore homes in urban and rural India by 2022.

Dhruv Agarwala, Group CEO, Housing.com/Makaan.com/PropTiger.com
Benefit of rollover of capital tax gains to be increased from investment in one residential house to that in two residential houses, for a taxpayer having capital gains up to Rs 2 crore; which can be exercised once in a lifetime as well as no income tax on notional rent on 2nd self occupied house will promote buying of second house by buyers. Announcements on income tax relief on notional rent from unsold houses which has now been extended to 2 years, along with extension of section 80IBA to March 2020 are positive for developers. The move to give full rebate to middle class with income upto Rs 5,00,000 is a very positive move and will be helpful in increasing disposable income for a affordable housing buyer planning to purchase a real estate asset.

Deepak Kapoor, Director, Gulshan Homz
“The government’s decision to increase the income tax slab from 2.5 lakh to 5 lakh is an encouraging step for the home buyers thus increasing their purchasing power to buy homes. The step would further improve the market’s sentiment”

Prateek Mittal, Executive Director, Sushma Group
The interim budget of 2019, will boost the end user as well as the investor. Increasing income tax exemption limit to Rs 5 lakh from Rs 2.50 lakhs is going to help the middle class people to realise their dream to own their house and is a supportive move by the government towards increasing their disposable income. Secondly, no tax on notional rent on the second self-occupied house is another impressive step taken the government to motivate the investors. It will give them the opportunity to buy a second house as an additional asset.
Extension of exemption of income tax on notional rent from unsold houses to the next 2 years is going to bring relief to the developers.

Overall this interim budget has been uplifting for the buyers and to some extent for the developers too. But, the long-standing demand of granting Real estate sector the industry status has not been met this time also.

Ashok Gupta, CMD, Ajnara India Group
“The step of increasing income tax exemption limit to Rs 5 lakh from Rs 2.5 lakhs will help people to fulfill their dream of having their own home. By making a buyer efficient enough to buy their home by maximizing their purchasing power will also boost the demand for affordable housing segment in the real estate sector.”

Amit Modi, Director, ABA Corp, Vice President, CREDAI Western UP
In term of real estate we believe that benefits under Sec 80(i)BA being extended for one more year, for all housing projects approved till end of 2019-2020, and benefit of rollover of capital tax gains to be increased from investment in one residential house to that in two residential houses, for a taxpayer having capital gains up to Rs 2 crore; which can be exercised once in a lifetime are the biggest take away from this year’s budget, in addition for existing home buyers income tax relief on Notional Rent from unsold houses which has now been extended to 2 years, along with increase in TDS threshold on rental income raised from Rs 1,80,000 to Rs 2,40,000.

In general we would like to congratulate the Finance Minister for a wholesome balanced budget, we believe that the move to increase income tax slab to Rs 5,00,000 is a very positive move. This is a helpful step towards increasing disposable income for a first time buyer planning to purchase a real estate asset. We also look forward to the outcome of Group of Ministers examining how prospective house buyers can benefit under GST, which we believe should not only benefit them on paper but practically as well.

At the same time we would have preferred a Single Window clearance for all Real Estate Projects just like the ones extended for Movie Industry, and increase in exemption on interest on home loan to at least Rs 5,00,000 per annum.

Kamal Taneja, MD, TDI Infracorp
“The interim budget 2019 has been upto our expectations. The government’s decision on giving an industry status to the real estate sector is still awaited. Also, the provision of Single Window Clearance in real estate would have eased the process project completion. “

Vikas Bhasin, CMD, Saya Group
Interim Budget 2019 has been welcoming enough for the individuals. Where on one hand, the income tax slab has increased from 2.5 lakh to 5 lakh thus enabling end users to invest in residential and commercial segment. In the same way, the decision of paying no tax on notional rent on the 2nd self occupied house will be helpful for the investors thus giving them an option to invest on another property.

Ashma Javed, Real Estate Expert
The noteworthy take away of Budget 2019 is the benefit of rollover of capital tax gains that are to be increased from investment in one residential house to that in two residential houses, for a taxpayer having capital gains up to Rs 2 crore. The move will boost the confidence of home buyers investing in the luxury segment. Also, no tax on notional rent on the second self-occupied house will give an opportunity to investors to buy a second house as an additional asset.

Dhiraj Jain, Director, Mahagun Group
“Extension of exemption of income tax on notional rent for unsold houses to the next 2 years is a relieving step for the developers. The step will in a way help the developer to focus on rest of his ongoing projects”

Gaurav Gupta, Director, SG Estates and President, CREDAI Ghaziabad
The interim budget 2019 has given a major boost to the real estate sector for capital gains reinvestment. The budget presented has been for the individuals thus nurturing their confidence and improving the market sentiment. The increment in the income tax slab and no tax on notional rent on the 2nd self occupied home is beneficial for an end user and investor respectively.

Sagar Saxena, Project Head, Spectrum Metro
Increasing income tax exemption limit to Rs 5 lakh from Rs 2.50 lakhs is going to help the middle class people to realise their dream to own their house and also will give them the power to invest in commercial segment. Increasing the tax slab is a supportive move by the government towards increasing the disposable income of an individual.

Rajesh Goyal, MD, RG Group
“Though, the decision to extend the period of exemption from levy of tax on notional rent, on unsold inventories, from one year to two years will give impetus to the real estate sector. But, the major step for real estate sector to get an industry status is still pending. The budget 2019 presented no doubt caters to the individuals, but with real estate sector getting a n industry status would have brought more hopes of growth in the market.”

Kushagr Ansal, President CREDAI Haryana, Director, Ansal Housing
“The move by government to extend the tenure of registry of affordable housing by 1 year is another step to accelerate the affordable housing segment, thus boosting the real estate sector.”

LC Mittal, Director of Motia Group
“The interim budget 2019 has given a major boost to the real estate sector for capital gains reinvestment. The move to increase the income tax slab to 5 lakh is a very constructive step taken by the government. This is a helpful step towards increasing discretionary income for an individual.”

“The benefit of rollover of capital gains under section 54 of the income tax act will be increased from investment in one residential house to two residential houses, for a taxpayer having capital gains up to rupees 2 crores will further decrease the burden on middle class.”

Nakul Mathur, MD, Avanta Business Centre
The Interim Budget 2019 presented has given impetus to the real estate sector. From lending a stronger back to the middle-class section of the country to providing some relief to the real estate developer the interim budget came with plenty of perks to offer to everyone.

Vikas Sharma, CMD, Bullmen Ventures
The government’s decision to increase the tax slab to 5 lakhs is a constructive step for the real estate sector thus giving power in the hands of buyer. The positive move will be helpful in increasing disposable income for a buyer planning to purchase a real estate asset”.

Ashwin Reddy, Managing Director, Aparna Enterprise Limited

Infrastructure and construction industry received notable sops during the interim budget which also benefits allied sectors like real estate. Significant boost has been given for rural development by sanctioning Rs 19,000 crore for this fiscal, however, allocations and actual pay-outs towards these projects will define the future course. We were hoping for announcements on GST reduction for building material sector and flexible income tax incentives for the affordable housing category, nonetheless, it is time to wait and watch how the GST Council will reduce the burden on home buyers in the coming months.”

Rakesh Reddy, Director Aparna Constructions and Estates Pvt Ltd

“Union Budget 2019 highlights the far-reaching magnitude of the real estate and infrastructure sectors on India’s overall economic performance. Building the physical and social infrastructure for a 10 trillion dollar economy requires a concerted effort from all parties.

The announcement with the largest impact on the real sector is the revised income tax slabs that reduce overall tax expenditure. This will enhance the ability of the salaried class to service their loans and therefore invest in real estate and widen the market opportunity for players in the sector. There are also other direct and indirect benefits for the housing sector and in particular the property developers. The notional tax that was payable if a property was unsold for a year has now been extended to two years taking into account the fact that there is an increase in the stock on unsold properties. In addition to that, the deduction under section 54 with regards to capital gains has been amended to give the exemption for two houses as opposed to one house. A notional tax that was levied on the second self-occupied property has been removed and is also a big positive for a middle income person.

While the above announcements in the interim budget coupled with the recent policy reforms are expected to create more stability over the long term, there are aspects which need to be addressed for a strong market revival. Chief amongst these is the reduction of GST on under-construction properties. It was announced that the GST Council will address this in the near future. This decision must be made at the earliest. The lingering possibility of a GST reduction only delays buying decisions and further stalls growth. A clear outcome will boost home buyer confidence and revitalise the sector.

Madhusudhan G., Chairman and MD, Sumadhura Group

On many fronts this is a favourable and bold budget for the real estate industry. Though many of the expectations, whether it is bringing in a structured single-window clearance or granting infrastructure status to the industry didn’t materialize, however the government’s stance towards reducing the GST burden on homebuyers is seen as a welcome move. In its ambitious quest to become a 5 trillion economy in the next five years, the interim budget, viewed as ‘Vision 2030’, has struck the right chord on several fronts, whether it is building next-gen infrastructure or building stronger digital India.

Steps taken and the impact on the real estate industry, as I see it:

The step of making more homes available under affordable housing is in-line with government’s vision of ‘housing for all’.

Giving impetus to the real estate sector, by extending the period of exemption from levy of tax on notional rent, on unsold inventories, from one year to two years, from the end of the year in which the project is completed is a slight relief to the developer community.
The proposed step to exempt levy of income tax on notional rent on a second self-occupied house is well addressed.

Steps which include rollover of capital gains tax on the sale of houses from one to two houses & full tax rebate for individual taxpayers having taxable annual income up to Rs 5 lakhs is definitely a bold move and a great relief to the Indian salaried class.

Manish Agarwal, Partner & Leader – Infrastructure, PwC India.

“Infrastructure continues to be the critical backbone which will help deliver on various social and economic objectives. The growing emphasis on Ease of Living will require wide ranging urban infrastructure to address issues like housing and transport, as also air quality and accessibility. Rural industrialization is key to linking farm sector with industry, and will need logistics infra to be significantly upgraded. The budget will not be able to continue to fund all of these, too far in the future. Going forward, it will be important to take measures to improve the country’s credit rating, and attract more long term foreign capital into infrastructure.

Sankey Prasad, Chairman and Managing Director, Synergy Property Development Services

While the industry laid down a lot of expectations from the interim budget, for instance, aspects such as according Infrastructure status to the industry, and structured single-window clearance among others, which weren’t met, the budget in its entirety took into account a host of other issues aimed to propel the economy into a 10 trillion dollar economy, which is a positive sign.

The steps taken could percolate into direct & indirect benefits to the housing sector. The impetus on affordable housing was once again visible. I believe the proposal to extend Income Tax benefits for affordable housing schemes coupled with doubling NIL Income Tax slab from 2.5 to 5 lakhs will definitely be an impetus to the affordable housing sector. Also, exemption of tax on notional rent, on unsold inventories up to 2 years would provide relief to the Developers on the short term and help focus on newer projects.

Shyamal Mukherjee, Chairman, PwC India

“The thrust on social infrastructure, ease of living, and technology led governance for inclusive, equitable growth is a welcome move. India would continue to need more structural, policy and economic reforms to become a $5 trillion economy in the next five years. There is a considerable ground to be covered and this Budget has set the tone for future discourse.

H. P. Rama Reddy – Chairman, Reliaable Developers

This year’s budget has been announced on an optimistic note, giving a boost to the middle-class sector and the farming population of the nation. With the Finance Minister announcing tax exemption for income up to Rs. 5 lakhs and an increase in standard deduction from Rs. 50,000 to Rs. 40,000, there is a definite reason for middle-class taxpayers to rejoice.

India, one of the fastest growing economies today, has laid the foundation for sustainable growth in the real estate sector. During 2014-18, under PM Awas Yojana, over 1.53 lakh houses have been constructed. With the establishment of RERA, 2016 realty law, the real estate landscape witnessed industry-wide transparency, fortifying investor sentiment while boosting realty sales. The decision to action income tax relief on notional rent on second homes will encourage consumer consumption, while the increase in deduction scheme threshold for rent from Rs 1.8 lakh to 2.4 lakh will encourage investments. Notional tax exemption, extended to two years, will also help developers clear off unsold inventory. Further, the government’s proposal of rolling over capital gains to two properties instead of one will generate investment opportunities in the real estate segment.

The government has set the stage for growth and development with path-breaking, comprehensive structural reforms such as GST (Goods & Services Tax). With the implementation of GST, the biggest taxation reform since Independence, a bevy of taxes have been brought under a single regime, says the Finance Minister, Piyush Goyal. The GST council has also announced that they will be taking steps to reduce tax for homebuyers. The council will suggest ways and devise a proposal to bring down the tax burden on house buyers, ensuring a positive shift in the real estate landscape. We, developers, yearn that GST rates for properties under construction be lowered or exempted, as it will not only benefit consumers and developers but also assist the overall sector to thrive.

Together, these direct and indirect incentives will bring about positive changes in the real estate landscape in 2019.

Ashish R. Puravankara,  Managing Director of Puravankara and President of CREDAI Bangalore

“This interim Union Budget has bought cheer to taxpayers and we welcome this move. An observed pattern in India is, increased savings bring people closer to their aspiration of becoming home owners. This of course augurs positively for the Affordable Housing segment and will go a long way in addressing the housing issues of the nation. Provident Housing, which is Puravankara’s premium affordable housing arm, is extremely happy to see this move in the right direction.

Secondly, the benefits of rollover of capital gains from investment in one residential house to two residential houses will help home buyers dream of buying their second home.

Lastly, the proposal to exempt tax levy on notional rent if a buyer has more than one-self occupied house acts as an added bonus to the home owners, increases liquidity and their spending power. From an industry perspective, there is some relief via the extension on levy of tax on notional rent for unsold inventories, from one year to two years. Government’s assurance that the GST Council is seeking recommendation from GoM’s on the GST applicable on purchase of homes is also heartening.

This Interim Budget has put some extra cash in the citizen’s pocket which in turn increases their spending power and strengthens the economy, which is the best India Inc. can hope for.

Ramratthinam S – CEO, Muthoot Homefin (India) Limited 

“The disposable income of EWS and LIG category borrower will increase with the exemption of tax on annual earnings upto Rs. 5 lakh and also increase in standard deduction by Rs. 10,000. The developers for new projects are also incentivise with the Income Tax exemption available till 2020 thereby keeping the prices in check.

The housing demand will witness good uptick with measures like no income tax on notional rent on 2nd self occupied home and also capital gains benefit allowed on second houses in select cases.

Parveen Jain, Vice Chairman NAREDCO & CMD, Tulip Infratech

The Interim Budget 2019 is Buyers’ friendly with the announcement of Tax rebates and incentives which is going to increase the investment and buying power of the common man, the biggest of all that No Taxation for annual incomes upto 5 Lac and gratuity limit having increased from 10 lac to 20 lac. The major highlight is that Rs 1 lac crore has been granted for Affordable Housing scheme which shall give a tremendous boost to achieve the PM’s mission of ‘Housing for All by 2022’. It has been recommended to GST council for reducing GST rates for home buyers.’

‘Other major highlights include that benefits under section 80(i)BA to be extended for one more year for Affordable Housing projects approved till 31stDec 2020. The benefit of rollover of capital tax gains shall be increased in investment from one residential house to two residential houses for a tax payer having capital gains upto 2 crore rupees, can be exercised once in a life time. Benefit in notional rent has been given in unsold inventory from one year to two years.The ceiling limit of TDS for rent has been increased from 1.8 lac to 2.4 lac per annum.’

RK Arora, Chairman, Supertech

After many years we have seen a budget that is as welcome as this one is. The honourable finance minister has gone out of his to improve the lives of almost every Indian in some way or the other. The proposals on tax rates for middle class are likely to have a significant impact on the economy as many will have more money to spend, save and invest. The middle class can now dream of a holiday home without worrying about tax on notional rent. We are very happy to hear of the proposals to extend the time limit for completing affordable housing projects to earn a tax holiday under 80IBA. This will bring a much needed breather for some projects which have struggled to complete for various reasons.

Over the past few years, policy changes like RERA and Benami Transaction Prohibition Act have helped bring a lot of transparency in the real estate sector. Further, we look forward to a favourable decision from the GST council on reducing the GST burden on homebuyers. We hope the group of ministers set up by the GST Council comes out with its decision soon and reduce the burden on homebuyers as soon as possible. The announcement that 1.53 crore houses have been made which is 5 times the earlier run rate is heart-warming and we congratulate the government on its achievement. We look forward to working with the government in the coming years to ensure that the Indian real estate sector can grow as fast as possible and become a showcase to the world.

Mohit Goel, CEO, Omaxe Ltd

The budget has succeeded to address the needs of the common man by extending fiscal benefits for housing. As the demand for affordable housing is increasingly becoming one of the fastest growing campaigns in the country, this budget has proved to be a step in that direction. Further the announcement of tax reduction for the salaried class leading to more disposable income and also Capital Gains Tax Benefits to the middle class will give a boost to the real estate industry as it works towards achieving the vision of housing for all. This will also help the overall economic growth.

Khushru Jijina, Managing Director, Piramal Capital & Housing Finance 

The Interim Budget for FY20 aims at a fine balance between the upliftment of the rural economy as well as incentivizing the high spending urban middle class. The budgetary provisions for India’s rising middle class is expected to stimulate demand and help attain the targeted economic growth. Budgetary outlays aimed at the real estate sector are encouraging for the sector. Benefits like rolling over capital gains tax to two homes and exempting income taxes on imputed rent for the second occupied home would stir up home demand especially in the affordable segment.

Additionally, the real estate developers would be benefited by the extension of the exemption period for levying tax on unsold inventories at a time when the sector is undergoing liquidity stress. Also, we expect a favorable decision from the GST council overseeing ways of normalizing the tax’s impact on developers as well as end consumers.

Also, the Finance Minister’s reiteration that renewable energy is one of the tenets of economic growth till 2030 would bode well for the industry including solar and wind energy.

The Government’s commitment towards managing the fiscal deficit as well as its debt is noteworthy. Despite the relaxations in direct taxes, the budget expects tax revenues to grow by 13.5% in FY20 compared to FY19 with Government’s borrowing growing marginally by 10% compared to the last year. We expect both equity and debt markets to react positively to Government’s commitment towards the fiscal glide path with bond yields on a downward trend this year.

Anil Saraf, CMD, ASF Group

The interim budget has focussed on the right areas to alleviate the stress on the housing sector and boost demand for housing units. The series of sops for both buyers and developers should help perk up sentiment in the sector that has been going through a sluggish phase with inventory piling up across the country. The budget announcements that allow investment in two residential houses now from one earlier to offset capital gains and provides exemption from income tax on notional rent from second self-occupied house is bound to increase demand in housing sector.

It is now expected that buyers with investible surplus will re-enter the market to purchase houses. Given that unsold inventory is a key concern for developers, the move to extend exemption period for levy of tax on notional rent from one year to two years is also a welcome move. Beyond the immediate relief measures, one of the 10 key dimensions for 2030 is roof on the head of every Indian. This shows that the housing, particularly affordable housing sector will continue to be a key focus area in the years to come.

Anoop Kumar Mittal, CMD, NBCC

The Government’s endeavour to significantly reduce the tax burden on home buyers is highly commendable. Extending benefits, under Section 80-IBA of the Income Tax Act for one more year, is a welcome move to alleviate stress on the real estate sector and to make housing affordable. With a strong focus on building rural and social infrastructure, tripling the construction of rural roads will be instrumental in offering seamless connectivity thereby improving quality of life. In addition to this, setting up the 22nd AIIMS in Haryana reflects the Government’s intention to offer affordable healthcare to the masses. The Budget 2019 is a demonstration of the Government’s vision to set up the stage for decades of growth. It is completely in line with India’s aspiration to become a 5 trillion economy in the next five years.

Amarjit Bakshi, Chairman & Managing Director, Central Park

“The real estate sector had sets it sights on the budget to rejuvenate the consumer sentiment in the already ailing sector. We welcome Government’s recommendation to GST council for reduction in the existing rates on housing which will have a positive impact on the housing sales. Further, the tax relief to the middle class will augur well and further spur the demand for mid-segment housing segment that has shown early signs of revival.

No tax on notional rent on second house and capital tax benefit u/s 54 being increased from investment in one residential house to two residential houses also translates into a good news for the sector as it will have a role in reviving the industry.”

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