This Budget will benefit the real estate industry immensely. With affordable housing finally getting infrastructure status, developers of budget housing will get access to large amount to cheap capital and the government can pursue the target of Housing for All by 2022 more vigorously. The change in qualifying size requirements from a built-up area of 30 sq m to a carpet area of 60 sq m and the increase in completion timelines to five years will give a much-needed impetus to the affordable housing segment by enabling developers to find more takers for their inventory. The one-year tax exemption from notional rental income from unsold inventory after obtaining the completion certificate will reduce developers’ tax burden.
The slashing of tax rate for individuals in the lowest income tax slab of Rs 2.5-5 lakh down to half from 10% to 5% will help broaden the tax net and increase the disposable income in the hands of low-salary taxpayers. This, coupled with incentives on low-cost housing and the reduction in interest rates by banks, will give the affordable housing segment the push it requires.
The announcement under the Taxation of Capital Gains of Joint Development Agreement which now makes landowners entering joint agreements for development of properties liable to pay capital gains tax upon completion of projects will help avoid litigation by removing any scope for ambiguity.