Realistic, But Otherwise
No ‘Real’ Implication ..!
We did not expect this budget to be a
game-changer.
The realities of the Indian economic
situation need to viewed in context with the factors that drive it, not least
of all the global economic situation.
 |
| Mr. Anuj Puri , JLL India |
There is no escaping the fact that the
business which comes to India from the European Union and the US has a
trickle-down effect on key economic drivers in India, and the Finance Ministry
does not control these factors.
The Union Budget can only hope to
address factors within its control.
This was a moderately encouraging
Budget in general, but tepid for the Indian real estate sector.
Positive Side..!
·· On the positive side,
it provided a boost to affordable housing with an additional interest benefit
of Rs. 1 lakh on first-time home loans up to Rs. 25 lakh.
However, this provision is only for the
first year & with a carry-forward benefit of the unutilized deduction to
the second year.
This will help boost housing sales in
tier 2 and 3 cities and peripheral areas and distant suburbs of metros, but not
within the metros, where housing is more targeted towards the mid and upper
income segments.
·· The setting up of the
Urban Housing Fund by the NHB (National Housing Bank) with an allocation of Rs.
2,000 crore will infuse liquidity for urban housing, thereby boosting demand.
·· The Budget's focus on
education & job creation is doubtlessly commendable. Job creation is a
primary driver for real estate in India, and there will be more schools that
could be set up.
Education is now a well-defined real
estate segment in India and will receive a boost in the mid-to-long term.
·· The additional
allocation of Rs. 14,873 crore to JNNURM towards public road transport will
help make lagging real estate locations more viable in the long term.
·· The TDS of 1% to be
charged on the transfer of immovable property is an obvious move to curb
speculation & bring about improved reporting and accountability in
high-value immovable property transactions.
Considering that the TDS is to be
charged on the gross transaction value rather than net gains, sellers will have
a cash-flow impact in situations where the sales are at a loss or / at zero /
negligible gains.
·· The rate of abatement on houses and flats of
above 2,000 square feet or / costing Rs. 1 crore and above has been reduced
from 75% to 70%.
Effectively, this translates into an
increase in service tax outflow, which means that luxury housing will now
become even more expensive.
Negative Side..!
·· There has been no
proposal on certain key expectations from the real estate sector. These include
implementation of the Real Estate regulator and the Land Acquisition Act.
·· All said and done,
Indian real estate will continue to struggle with its larger hurdles. While the
affordable housing category has been rightly given due attention, aspects
relating to improved transparency and corporate governance within the sector
have been largely ignored.
·· That said, the Budget
has shown commitment to improving communication on taxation and regulatory
policies. This should give more comfort to offshore real estate investors who
have been bogged down by the political inertia and therefore unsure of India as
an investment destination in the recent past.
Mr. Anuj Puri, Chairman & Country Head,
Jones Lang LaSalle India
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