Affordable housing was a big focus of budget 2019-20. Govt will bring Ideal rental law to formulate Rental Housing in India. To resolve fund crisis, Govt. is bringing HFCs under ambit of RBI but for real estate sector some factors still untouched.
The very first budget of 2nd term of Modi govt. was full of highs and lows. Finance minster Nirmala Sitharaman presented her first budget and made some realistic announcements. Focusing on affordable housing, real estate sector was all set to address future issues. Here are some top picks and drops of budget with reaction of experts:
Affordable housing– Dedicated to push affordable housing, Govt. introduced provision of additional tax benefit of 1.50 lakh for home buyers on units of Rs. 45.00 lakh borrowed till March 2020. Earlier this limit of only 2 lakh for home buyer so now total benefit comes to 3.5 lakh in a financial year for a home buyer. On a home loan of 15 years, a home buyers can save tax up to 7 lakh! Calculating all tax saving schemes, a first time home buyer, purchasing home with home loan, will be able to save almost 10.50 lakh per annum.
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PMAY– As flagship program of govt. for housing construction, Pradhan Mantri Awas Yojna will be continue to built more homes in Gramin and Urban areas. As per records, 1.5 crore homes has been constructed under PMAY – Gramin and till 2022 1.95 crore more units are on target of govt. On the other notes, 24 lakhs units have been delivered under PMAY- Urban and another stock of 81 lakhs units have been sanctioned to build till 2022.
Budget was quite balance for real estate sector. We were expecting that individual tax limit will be increased beyond INR 5.00 lakh but govt. has decided to observe the response. But good news is for home buyers who will get extra benefit of 1.5 lakh on purchase of unit up to Rs. 45 lakh. This is a big push since home buyers were demanding more deduction on interest and govt. has fulfilled wish of a large consumer segment. Rest long term capital gain, TDS deduction and notional rent has been untouched so it is a big boost for home buyers. Still I feel that govt. must think of stress fund and bring back ITC for real estate.- Suresh Garg- CMD, Nirala World & Ex-Secretary, CREDAI Western UP
Ideal Rental Law– Budget has special mention of introducing ideal rental law and this is connected with long pending demand of bring Housing Rental Law for urban areas. This law will help tenant and landlord to come to an agreement valid nationally.
Also read > Why 2019 is best year to buy home!
Fund Crisis– Govt. is more concerned to solve fund crisis of housing finance companies. For this, RBI will be armed to regulate all housing finance companies. In fact NBFC also got attention to boost real estate. Govt. will infuse 70,000 crore in banks and route to NBFCs for further lending along with one time credit guarantee.
Housing for all is going to get quick boost after this budget. Govt. is now ready to allow own land for housing development and i feel that PPP model will the best to adopt. Without infrastructure, growth of real estate is a dream and infrastructure has big share in the budget. Regulation of housing finance companies under RBI is positive step for real estate. Affordable housing is focus of govt. and benefit of Rs. 3.5 lakh on interest of home loan is going to attract huge mass. After GST rate cut, this has made affordable more lucrative for home buyers and investors both. Govt. must review GST on raw materials especially cement to support construction of affordable housing. – Avneesh Sood- Director, EROS Group
Infrastructure– Infrastructure is directly connected with growth of real estate sector. Govt. has wide plans to improve connectivity via rail, road, metro and airways. One nation- one grid to solve water and power supply will improve urban and rural living.
Good news is for affordable housing where home buyers buying units upto 45 lakh will get benefit up to 3.5 lakh and earlier it was only 2 lakh. So home buyers will get benefit in interest of home loan paid to banks. Individual tax saving limit is still Rs. 5 lakh and I think this is going to boost demand of housing. Housing finance was big concern of real estate and Govt. is now focusing on housing finance companies by bringing all under RBI is next level step to address funding part. The budget was focused to boost infrastructure in the country which is important for real estate. One nation, one grid to ensure water, power and gas demand is futuristic step. Hope that govt. must find a way to assign industry status to real estate and provide single window clearance. – Dinesh Jain- MD, Exotica Housing
No industry status & single window– The sector was expecting to get industry status for real estate but seems they wait is still not over. Govt. is very cautious in taking step and regulation of HFC are one step ahead to organize the players of sector. Single window clearance is also miss in budget which is a long due demand of sector.
Budget was dedicated to affordable housing segment. This budget has increased saving capacity of home buyers and this will convert in to home purchase. If I count sops of last time and this time, home buyers of affordable segment are now kind of market. Saving of Rs. 3.5 lakh on home loan interest is good news for any home buyer. Ultimately it will encourage home buyers to invest in home and get benefits under PMAY as subsidy, home loan interest, low GST and RERA secured home. I hope input tax credit and separate fund for real estate should be part of budget too. – Hariom Dixit- Director, Gayatri Group
GST on raw materials– In lack of ITC (input tax credit), sector was expecting cut in GST on selected raw materials like, cement, stones etc. in order to control prices. But govt. didn’t address that part.
We were expecting hike in tax limit but tax benefit on home loan interest for individuals was out of the box and meaningful for real estate. Budget 2019-20 is good for middle income group and push home buyers to invest and get tax benefit. Govt. has not changed any provision of February month but offered additional benefit. Rental housing is also a big time demand and seems this will come true in Modi 2.0 – Saurav Paruthi, MD- Param Homes.