The Finance Minister has finally announced the much awaited Union Budget 2017-18. The budget has impressed the citizens giving a major boost to the realty sector. This was the 3rd extensive budget presentation by the BJP government and the first after the historical 50 days of demonetisation. The government seemed to be pro-active in giving rebates and incentives. A major incentive announcement for the affordable housing segment came on December 31st, 2016, followed by the banks declaring lending rate reductions. By making big announcements like granting infrastructure status to the affordable housing segment, reducing the tax rate for the initial slab and big plans laid for the infrastructural development in the country, clearly builds the road ahead for the realty sector. As was expected, a common man’s budget has been presented hoping for a positive transformation in the economy.

Key Economic Highlights:

  • CPI inflation dropped to 3.4 percent from 6 percent.
  • Trade deficit dropped from 1 percent of the GDP to 0.3 percent of the GDP.
  • FDI increased from INR 1.07 lakh crores to INR 1.45 lakh crores.
  • Forex reserves stand at $ 361 Billion which is equivalent to sustain 12 months of imports.
  • GDP stable at 7.3%.
  • Revenue Deficit stands at 1.9%.

Key Hits from the Budget:

  • Infrastructure Status accorded to Affordable Housing also redefining the unit sizes of 30 sq. mtr. and 60 sq. mtr. from built up area to carpet area.
  • Projects in the direct municipalities of the four metropolitans to be considered for 30 sq. mtr. capping, rest all regions to have the capping at 60 sq. mtr. for affordable housing.
  • Affordable housing projects to be awarded a completion time of 5 years from launch as against the previous tenure of 3 years.
  • Developers to get one year’s time to pay tax on national rental income on completed unsold residential inventory.
  • Tax benefits to the middle-income group, providing tax rate cuts of 5% for people in the income slab of INR 2,50,000 to INR 5,00,000. Additional reduction of INR 2,500 for people earning INR 3,00,000 annually making their total tax component zero. Reduction of INR 12,500 allowed on the final tax figures of remaining slabs.
  • Income Tax rate for MSMEs with turnover upto INR 50 crores reduced to 25% from the earlier rate of 30%.
  • Pradhan Mantri Gram Awas Yojna to build 1 crore houses by 2019. INR 23,000 crores allocated for this financial year compared to INR 15,000 crores in the last financial year.
  • Pradhan Mantri Gram Sadak Yojna allocated funds of INR 19,000 crores which will cumulatively amount to INR 27,000 crores with the contribution from states.
  • INR 64,000 crores allocated for Highways against last year’s INR 57,676 crores. This would also include 2,000 Kms of coastal connectivity which have been identified.
  • A total of INR 3,96,135 crores has been allocated towards infrastructure development which is the highest in history.
  • Airports in smaller towns to come up with Public-private partnership (PPP) model.
  • FDI norms to be further liberalised and online application to be enabled for FDI. Foreign Investment Promotion Board (FIPB) to be abolished.

The government has yet again presented a Budget that will bring about a cheer to the masses. From favourable changes in the personal income tax structure to heavy investment plans for the infrastructure along with infra status for the affordable housing segment and so much more, real estate sector is sure to, directly and indirectly, benefit from this budget in the near future. Amongst the big decisions, an outlay of almost 4 lakh crore has been planned for infrastructural development across the country, no tax for earners upto INR 3 lakh a year and no property tax for developers on unsold inventory till one year after completion certificate is issued. With such announcements, we are projecting the demand for budget housing to multiply that will also allow a positive drift in the momentum for the realty sector.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s