Real Estate Highlights: Union Budget 2017-2018 Affordable housing finally gets the Infrastructure Status.: A right step towards the long pending industry demand. Will provide impetus to 'Housing for All' initiative, facilitate easier access to institutional funding (by becoming part of priority sector lending and accessing foreign funds at a cheaper cost by way of debt ), associated tax benefits will help cashflows since the margins in affordable housing projects are very low and at an overall level, increased supply of affordable housing units will help keep real estate prices (from a demand - supply equilibrium perspective) in check. Fine prints awaited, shall provide more clarity.

  1. 1 crore pacca homes for the homeless to be built by 2019
  2. Instead of Built up area of 30 and 60 sq meters, the carpet area of 30 and 60 sq meters will be applicable
  3. Over 50% increased allocation for PMs Awas Yojna to boost volumes for affordable housing finance companies. Rs 23,000 crore is allocated this budget, against Rs 15,000 earlier.

Capital Gains: Capital gains on JDA to be taxed only at product launch, 1 year tax exemption from notional rental income from unsold inventory and reduction of long term capital gains tax period provide respite to investors/ developers of real estate. This helps especially those holding real estate inventory/ stock. This is a great move to provide providing tax relief to developers in the residential sector where the sales have significantly dropped post demonetisation move.

  1. Liability to pay capital gains will arise only in the year a project is completed.
  2. Holding period for capital gains tax for immovable property reduced from 3 years to 2 years.
  3. Capital gains tax to be exempted, for persons holding land from which land was pooled for creation of state capital of Telangana.

Tax Concessions: Extension of project completion from 3 years to 5 years for tax concessions is an extremely welcome step. The change from Built up area to carpet area for the purpose of tax concessions in the affordable segment will improve transparency. Real estate developers to get tax relief on unsold stock. Miscellaneous: Dispute resolution in infrastructure projects in PPP mode will be institutionalised India to be Global Hub for Electronics Manufacturing. This will boost Industrial Real Estate in established and newly proposed Industrial Corridors. DMIC among other more matured Industrial Corridors newly established may see demand offtake due to this proposed budget measure. Airport Authorities of India Act to be amended to provide monetisation of land assets. Courtesy: economictimes.indiatimes.com

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