|Budget 2013-14 receives mixed reactions from real estate community|
|Monday, 04 March 2013 09:16|
The real estate sector has welcomed Budget 2013-14 with mixed emotions. While some were disappointed with the implementation of 1% TDS, others felt that increase in funding for roads, highways and other infrastructure is a positive move. The general belief is that the initiatives have done very little to uplift the industry at large.
Let's get a sneak peak into the reactions from industry stalwarts:
Ravi Saund, Chief Operating Officer, CHD Developers Ltd
The budget may have failed to live up to the expectations but one can't shy away from the fact that this is a responsible budget. Infrastructure has received a major thrust, especially transport and energy segment. The steps to increase funding for roads, highways and other infrastructure will surely add more terrain on the Indian realty map taking tier 2 and tier 3 cities on new growth trajectory. The government has encouraged the home buyers by giving additional deduction of interest of up to Rs 1 lakh in 2013-14 to the first time home buyers taking housing loan of up to Rs 25 lakh. There's a scope of improvement in the interest subsidy to boost the housing sector.
The imposition of 1% TDS on property worth more than Rs 50 lakh will not only control speculation, but will also bring about improved reporting and accountability in high-value housing transactions. The government's move of injecting more money in the market by providing stimulus of Rs 6000 crore and Rs 2000 crore to rural housing and urban housing respectively, will further support the growth of the sector by increasing the liquidity.
Sanjeev Srivastava, Managing Director Assotech Ltd
Prashant Tiwari, CMD, Prateek Group
Reduction in the service tax rate of abatement will make homes upward of Rs 1 crore more expensive for home buyers as the tax out go will go up. But the number of people who will be affected will be few as there are not many home buyers in this segment. These higher tax out go will be passed on to the home buyers. We really were hoping for Industry status for Real Estate sector which could have helped us in raising capital at lower interest but this has been a disappointment.
Deepak Kapoor, Director, Gulshan Homz
The budget was said to be very bold and we were really expecting good things out of Budget 2013 but it didn't came out the way we expected it to be. Just like the Sensex, our expectations fell low as things got out of the bag. Increase on excise duty and lowering of service tax abatement will hit the luxury housing dearly. We were really expecting our Finance Minister to talk on granting Industry status to real estate sector but that went missing. We also hoped some reforms on single window clearance as it consumes a lot of time and money but even that wasn't discussed. Tax relief on a housing loan up to Rs 25 lakh might be of some help for people residing in Tier-II and Tier-III cities.
Vipin Sondhi, MD & CEO, JCB India Ltd. reaction on National Budget 2013
The Finance Minister has rolled out a well-balanced and realistic budget. He has taken steps which will help him deliver on his promise to contain the fiscal deficit to 4.8% for 2013-14, though the math is still to be seen. Emphasis on Infrastructure sector viz credit enhancement by IIFCL, PMGSY and award of 3000 km road projects, building of new ports at Sagar and one in Tamil Nadu, focus on a Chennai-Bangalore and Mumbai-Bangalore industrial corridor and introduction of Investment allowance should help revive the investment cycle in the country which would definitely add to growth. The key, however, lies in expediting the execution of infrastructure projects and we hope that Cabinet Committee on Investment (CCI) would help achieve this objective.
Introduction of 1% TDS on sale of property of more than Rs 50 lakh plus the reduction in service tax abatement will surely hit the demand in the NCR region as most of the properties here are above Rs 50 lakh. Buyers in Tier II and III cities will not be affected much as there are not many projects falling in that category. Therefore, the definition of luxury housing is apt for those cities. However, for metros like Mumbai and Delhi, even the basic housing cost is Rs 1 crore and this proposal will affect almost every buyer here. Not giving the Industry status to this sector even after being a major contributor in GDP and one of the largest employer is another setback.
Ashwani Prakash, Executive Director, Paramount Group
Unfortunately, once again in Budget 2013-14 real estate sector has been deprived of the industry status which itself would have given this sector a boost and a long awaited movement. The Finance Minister has given an additional relief of Rs 1 lakh against a home loan of Rs 25 lakh which will definitely provide a comfort and rope-in the customers with a dream of their own house. Imposition of 1% TDS on selling of a property with a value of more than 50 lakh is bound to show its impact and the property prices in the market particularly high value properties may witness an upward trend.
Anuj Chaudhary, Director, Panchsheel Buildtech
On the face of it, there seems to be something to cheer about for the Real Estate sector. The road map for development of the Delhi-Mumbai and Chennai-Bengaluru industrial corridor seems to be a positive step towards developing 'Smart' cities. The additional tax incentive on home loan interest is welcome. Service tax increase is unlikely to negatively influence luxury homebuyers. Re-introduction of TDS provisions will upset the developer community.
In our pre-budget expectations, we were expecting the government to increase the cap of home loan interest deduction limit from Rs 1.5 lakh to Rs 3 lakh for first home buyers. The Finance Minister increased the limit to additional amount of up to Rs 1 lakh for new home loans of up to Rs 25 lakh, which will be taken from April 1st 2013 to March 31st 2014. This will lead to renewed interest by end users to invest in housing projects and would strengthen the cement and steel markets as well.
The announcement of National Housing Bank (NHB) setting up an Urban Housing Fund, tax sops for first housing loan of Rs 25 lakh and provision of an additional Rs 1 lakh rebate in addition to the existing Rs 1.5 lakh rebate will help to revive the demand for housing stock. The allocation of Rs 2000 crore for housing in the urban areas appears to be on the lower side considering that the estimated shortage of housing units is placed at more than 18 million units. Provision of Rs 6,000 crore in the rural areas would certainly result in more permanent constructions. The budget move to levy 1% TDS on properties above Rs 50 lakh would prove to be a major burden for both developers as well as customers especially in the metropolitan cities like Delhi and Mumbai and their outskirts as even small apartments in these areas cost more.
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