This year’s Union Budget was expected to come across as a reformist one for the real estate sector, but it left the industry disappointed as it lacked any hard hitting and direct benefits for it. Finance Minister Arun Jaitley simply missed some very important points that the developers and homebuyers were eagerly waiting for him to address in Budget 2015. Top 5 points that the industry considers the ‘biggest misses’ in the budget are –
Smart Cities – The industry awaited a clear roadmap for the development of 100 Smart Cities. However, the Budget did not find any mention of the same, other than the assurance of GIFT City as a model smart city by March 2016. Industry feels that the Government should have provided some clarity on policies and allocated some budget for the development of Smart Cities, a concept introduced by them in their first Budget in 2014.
Manju Yagnik, Vice Chairperson, Nahar Group says, ‘The Budget is quite disappointing as far as the real estate sector is concerned. There was a lot of expectations as the Prime Minister had proposed Housing for all by 2022 and development of smart cities. The development of smart cities and overall, the sector has been widely ignored.”
Affordable Housing – While Housing for All by 2022 has been given some importance in the Union Budget 2015, there have been no measures taken to make housing affordable. “We were expecting incentives for developing affordable housing in terms of tax rebates on raw materials, additional exemption on the Income Tax on housing loan, and streaming of other taxes including Service Tax. On the contrary the service tax has been increased from current 12.5 per cent to 14 per cent,” adds Yagnik.
The hike in Service Tax would have a direct bearing on the paying capacity of an individual. Though, the Government has taken some direct and indirect measures to give an impetus to individual savings, those are not sufficient to make real estate affordable for common people. Rohit Gera, MD, Gera Developments and VP, CREDAI, Pune Metro says, “The budget has completely ignored the residential real estate market and there is a total lack of any push for the housing sector.”
Reintroduction of Section 80-IB – This was touted to play a critical role in realising the dream of ‘Housing for All” by 2022. However, this too has been given a miss this time. Vivek Gupta, Director, Vardhman Estate & Developers says, “Tax incentive under Section 80 IB would help develop housing projects with stringent provisions. This would have resulted in more supply and lower prices, ultimately leading to affordable housing.”
Removal of DDT and MAT in Special Economic Zones (SEZs) – Divided Distribution Tax (DDT) and Minimum Alternate Tax (MAT) have been a long pending concern for commercial real estate developers as they have dented the investor’s interest in SEZs for a long time. Developers have been hoping for the removal of these taxes, which the FM did not address, even this year.
Infrastructure Status - The real estate industry has been longing for infrastructure status for years now. The move could have helped induce transparency and made real estate an organized sector. However, this year’s budget also gave it a miss. Disappointed, David Walker, MD, SARE Homes says, “Budget once more falls short of meeting the expectations of the real estate sector, mainly the residential housing segment. The sector will have to continue to wait for its foremost demand for a separate infrastructure status and other measures which would have rejuvenated the weakened demand which had adversely hit the sector.”
Overall, the real estate industry found the Budget 2015 to be high on hopes, but low on execution and has been left with an “IF ONLY” expression. “If Only” FM had …….