Finance Minister, Nirmala Sitharaman presented the Union Budget 2020-21 on
1 February. Highlights of the budget for the real estate sector are as follows:
Deductions on affordable housing
were allowed on housing loans sanctioned on or before March 31, 2020. In order
to ensure that more people take advantage of this benefit and to pursue
affordable housing, the date of loan approval has been proposed to be extended
by 1 year. To boost the supply of affordable homes in the country, a tax
holiday is being provided on the profits earned by the developers of the
affordable housing project till 31 March 2020.
Currently in real estate
transactions, when taxing income from capital gains, business profits, and
other sources, if the consideration value is less than the 5% circle rate, the
difference is counted as income for both the buyer and seller. To reduce the
difficulty in real estate transactions and provide relief to the sector, it has
been proposed that the limit be increased from 5% to 10%.
An investment of Rs 100 crore
will be made on infrastructure in the next 5 years in various sectors like
housing, infrastructure, energy, healthcare, educational institutions,
transport, logistics and warehousing, irrigation projects etc.
The year 2019 was a period of
many highs and lows for the Indian real estate market. The ongoing crisis
resulted in a decrease in liquidity and a slower pace of sales improvement.
However, on the positive end, the successful launch of India's first real estate investment trust (REIT)
opened up new avenues for investment, while several positive government
initiatives provided much needed relief to the sector.
According to research,
the housing sale price of India's top 9 listed players reached in the 2nd and
3rd quarters of 2019, an increase of 5%. 2019 saw a 4–5% annual increase in
housing sales with over 2.58 lakh homes sold during the year. The new housing
launches in 2019 saw 18-20% annual growth and developers are expecting
sustained efforts of the central government such as additional cuts on loan
interest, GST rate cuts, alternative investment funds for stalled projects and credit
guarantee scheme changes in the sector will be strengthened.
