"A step was taken in the last Budget to encourage Real Estate Investment Trusts (REITs) and Infrastructure Investments Trusts (INViTs) by providing partial pass through to them," Jaitley said in his Budget 2015-16 speech. The central government will also allow foreign investment in Alternative Investment Funds (AIFs), a category of pooled-in investment vehicles for real estate, private equity and hedge funds. While presenting the Budget for 2015-16 in the Lok Sabha, Finance Minister said that the government would do away with different categories like Foreign Portfolio Investors (FPI) and Foreign Direct Investment (FDI) for such investments with a view to making it easier for overseas investors to invest in AIFs. Though the budget 2015-16 has not increased personal income tax deduction limits and has not provided the much required relief for common man.But it has considered penalization of black money, implementation of GST (Goods and Service Tax) by next year (2016 April), removal of wealth tax and allocation of Rs. 22,407 crore for taking measures in housing and urban development across the country in 2015-16. Here’s how the Indian realty industry feels about the Union Budget 2015 -16  Mr. Kishor Pate, CMD – Amit Enterprises Housing Ltd. The budget has fallen short of expectations and not delivered on many of the expected counts. It has not provided any direct relief for the common man. It has not increased personal income tax deduction limits, nor has it provided any relief for home loan borrowers. However, the previous budget 2014-15 had already given relief on those fronts, so it was not really likely that this budget would go further. The budget has clamped down heavily on the use of unaccounted-for money & given more incentives for the use of online money payments and transfers. It is no secret that the highest incidence of black money transactions is in the real estate sector, and the move to increase penalization of black money transactions will boost transparency in the sector. On a positive note, the real estate sector was expecting a major announcement on the deployment of GST (Goods and Service Tax) , which will serve to eliminate the multiple taxes associated with home purchase. The fact that GST will become a reality from the next financial year is a relief to home buyers, who have so far been burdened with excessive taxes. In a major move, the Finance Minister Mr. Arun Jaitly has removed wealth tax altogether and replaced it with a new Super Rich tax applicable only to assets worth above Rs. 1 crore. This means that for the majority of Indians, there will no longer be a tax on property ownership and that only super-luxury homes will be taxed. This is a big relief for the Indian middle class. The above are positive, but I do not see this budget as a game-changer for the Indian real estate sector. Bhairav Dalal, Associate Director, PwC India The Hon’ble Finance Minister has made quite a few announcements in Budget 2015 for the Real Estate sector. There is renewed emphasis on “Housing for All” by 2022 but no direct benefits on Affordable Housing. Promoter-level capital gains tax on migration to REITs has been rationalized, which should kick start the REITs industry. Although, Minimum Alternate Tax on the migration to discourage promoters to immediately initiate the process. Clarity on tax pass through for domestic Real Estate Funds should act as a catalyst in attracting significant investment. Removal of wealth tax should also be a positive for property investors. Venkatesh Gopalkrishnan - President and CIO of Shapoorji Pallonji Real Estate There is a clarity has been provided for the direction of the next 2 -3 years in terms of fiscal deficit and growth. The focus of ease of doing business and rationalising the AIF norms and the permanent establishment norms is proof of the same. The reduction in corporate tax from next year onwards for 4 years and concomitant reduction in exemptions is a very positive and transparent move. But, more could have been done on the personal taxation front. For housing the positives are clarity on rationalsing capital gains on REITS and clarity on increasing housing stock to 2 crore houses in urban and 4 crore houses in rural areas. However some of tax sops on home loans which would spurred demand in short to medium term are absent.
Mr. Harpreet Singh, Partner- Risk Advisory Services, PwC India
We will have to wait to understand the implementation strategy that should back such an announcement”
Mr. Ramnik Chopra, Managing Director, Coldwell Banker India
"The Union Budget 2015-16 is quite innovative. Even though the fiscal deficit is high there are many steps to benefit our industry. Steps to avoid circulation of black money will help real estate industry to be more organised. It will also bring back talent pools to India which will grow income in the hands of our target audience. Even reduction in corporate tax will generate liquidity and measures to boost infra projects will help us greatly. This budget will also benefit the small individuals which will change the investment sentiment in the country. The budget will not only benefit the real estate industry but will also boost the economic growth and will give momentum to all industries. Overall the budget is the one giving impetus and the economy is on a takeoff. The green shoots of the same can be seen around."
Mr. Surabhi Arora, Associate Director, Research Colliers International
“The finance minister announcement to set up an expert committee for legislation on making a pre-existing regulation to expedite approvals is a welcome move as it is a step towards single-window clearance system. The real estate industry is constantly demanding an efficient approval system for real estate projects and also incentives states to follow suit. Due to delay in approval process most of the projects are currently facing construction delays of time up to 3 years sometime. The construction delays result not only results in huge cost overruns but also impact the investor sentiments. The industry is in dire need of a single window clearance mechanism which has a potential to reduce the construction delays. Internationally, the time taken for getting approvals is three to nine months however, in India the time lag from conception to beginning of construction is anything from two to three years. Backed by a technology platform the single window clearance system will enable the industry to get approval quickly and save themselves from cost overruns due to delays.”
Mr. Rohit Gera, MD, Gera Developments and VP, CREDAI, Pune Metro
“Overall the budget is certainly positive but it is not a super Big Bang budget. The budget has completely ignored the residential real estate market and there is a total lack of any push for the housing sector. We hoped for increased deduction towards home loans amongst other things to give an impetus and augment growth of the industry. The proposed additional investments in infrastructure will further improve the economy and this will definitely have a trickle-down effect on customers who will eventually buy homes. The move to eliminate black money both within and outside the country is a very welcome move. The elimination of wealth tax and replacement with a small surcharge are also positive steps. The thrust towards a social security economy as well as the priority to address the unbanked, unfunded and uninsured is optimistic. The reduction in corporate tax is encouraging and the intelligent-new projects wanting to Make in India will see the benefits arising out of this as they start earning income. This will augur well for the industry and is progressive." Rohit Poddar, Managing Director, Poddar Developers The budget is well managed with a focus on growth. Infra focus like roads bridges etc. in the short term will lead to job creation, leading to consumption increasing and ultimately leading to investments by Corporates. The investment cycle needs to pick up and this budget should fast track that. Disappointed to not hear anything specifically mentioned on the affordable housing sector.
David Walker, Managing Direction of SARE Homes
The Government's move to rationalise the capital gains regime for REITs and InvITs however will be beneficial for the commercial realty space. 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.” Neeraj Bansal, Head of Real Estate and Construction, KPMG in India “Modi Government’s first full budget is a strong statement of direction – indeed a forward looking budget with pro-growth and pro-business being the underlying themes. The infrastructure sector will get a boost with clarity and tax incentives, which will have a cascading, but gradual impact on the real estate demand and also support the positive sentiment. For the real estate sector, while the proposed rationalization of capital gains tax regime for sponsors of REIT and pass-through status for rental income from owned assets is a welcome move, the Budget 2015 falls short on the industry’s many expectations on affordable housing front.” Mr. Sanjay Dutt- Executive Managing Director, South Asia, Cushman & Wakefield The Finance Minister has missed an opportunity to use real estate sector as another trigger for economic growth. Some of the long pending demands of the real estate sector pertaining to removal of DDT and MAT in SEZs, reintroduction of Section 80 -IB for low cost housing, extension of interest subvention for affordable housing etc. have been ignored yet again. However, on the positive side, the withdrawal of Wealth Tax could boost investments by the middle-class and some sections of the high-net worth individuals, as they now no longer need to worry about getting taxed each year on long term investments in the sector. Secondly, allowing rationalisation of capital gains on transfer of assets to REITs has actually taken care of a key demand by the sector. Further, the announcement of lowering Corporate Tax from by 5% in the next few years will also help to attract further investments from domestic and foreign companies. There are other indirect benefits to the sector, especially in commercial real estate, as the government has taken a number of proactive steps to boost demand for real estate through a focus on infrastructure development on a massive scale as well increase in investments by entrepreneurs and companies. The 2015-16 Budget delivers a controlled but big bang push aimed at a sustainable economy through initiatives that accelerate growth, enhanced investments and ensure benefits to all stakeholders. In a well thought and finely nuanced approach, instead of introducing dramatic concessions to boost the economy into double digits growth, the PM and FM have instead focused on making definitive structural adjustments to policy and frame-works that will deliver all round growth across the agricultural, manufacturing and services sectors by encouraging investments and entrepreneurship (by improving the ease of business) and improving the infrastructure( through investments and more reliable policy structures). Specifically, instead of introducing policy measures that focus only on a year’s growth at a time, they Government has laid out a long term road map that will achieve housing, employment and better income generation, health and welfare for all by 2022. Pallavi Purandare, General Manager - Marketing, Aristo Realty Government decision to invest 150 cr in IT sector is much appreciated. Expansion in IT industry would certainly create demand for IT hubs Increase in Excise duty from 12.36 percent to 12.50 percent would increase cost of construction due to increase in prices of raw material. This will certainly have an adverse effect on construction industry." Harjith Bubber, CEO and MD, CCI Projects Pvt Limited "The hope for industry is on increase in labour supply to the construction industry through the National Skills Mission for skill development and entrepreneurship. The Government and the Hon Prime Minister, as we know, are putting their effort into skill development which is a must for the youth in the country. Secondly, the increased spend on infra and the Government’s focus on the same will help open up new areas for development and the construction industry can move into newer areas. Equity exemptions being extended to REIT’s will give a fillip to investment in REITs and the construction industry will have alternate avenues to pick up money for construction." Mr. Pradeep Jain, Chairman, Parsvnath Developers “The budget presented by Hon. Finance Minister lays down the vision of the Government, looks balanced and proposes a steady growth ahead. It is a well planned and thought out budget where the Finance Minister has tried to ease out the working environment for domestic corporations as well as foreign investors. Announcement to rationalise the capital gains regime for REITS and InvITs will benefit the commercial realty space. The hope this budget brings in for economy is the implementation of GST by 2016. We were hopeful that the government would make it applicable from this fiscal itself. Nevertheless, implementation of GST would make business operations much easier and would help us get rid of multiple layers of indirect taxes. Also, the announcement of formation of a legislator to make a single window for multiple clearances is again something to look out for. However, whether housing projects come under its ambit is yet to be clarified. Also, reduction of Corporate Tax by 5% to 25% over the 4 years period is a welcome step. Government has also announced building 6 crores housing units under ‘Housing for All by 2022’, however there are no clear guidelines as how this goal shall be achieved. Overall, budget looks good for the economy in general. However for the real estate sector, we are disappointed. There are also no clear guidelines on various indirect taxes this sector is forced to pay. The long pending demand of the sector which is the second largest contributor to the GDP, to be granted infrastructure status went unnoticed. We are also the largest employers after agriculture. The kind of continuous ignorance various governments have shown to this sector has hampered a lot. We expected this government will give some impetus to real estate this time, however we are left empty handed yet again. We are hopeful that government would come out with guidelines for Smart Cities and Housing for All schemes at earliest. Also, we hope it would reconsider our demand for the infrastructure status which would sort out multiple problems this sector is facing.” Mohit Goel, CEO, Omaxe Ltd However, the government has found other ways to spur savings, which might not necessarily result in any captive investment. The increase in service tax is another negative for real estate. The decrease in corporate tax may not result in investment. The Government’s vision on Housing for all by 2022 and Smart Cities needs more concrete direction. I believe that the measures announced today in the Budget will see a far reaching impact in the years ahead, but not immediately.” Shrikant Paranjape, Chairman, Paranjape Schemes (Construction) Ltd “Though there is not much for real estate in this budget and we are a bit disappointed, the overall budget in general is proactive. Capital Gains and pass-through benefits to REIT is welcome. Abolition of Wealth Tax is welcome and intelligent move. New bank to fund small unorganized industry and self-employed is welcome. A similar bank to provide housing loan to this urban poor self-employed or employees in unorganized sector should be set-up. Postponing GAAR and increasing the limit of domestic transfer pricing to 20 Cr is a good move. Neeraj Gulati, Managing Director, Assotech Realty However from real estate stand point it is quite inadequate, that the long held demands which was expecting more sops to boost domestic demand and reduce borrowing costs, have not been addressed in the current budget, apart from contribution of REIT exempted from capital gains and 70, 000 crore grant for infrastructure development and GST implications by 2016. Affordable housing will definitely continue to be an area of focus. But, to encourage developers to enter into the budget homes segment in order to take advantage of tax incentives, the government should have emphasized on the timely and transparent implementation of the announced schemes. The decision to slash the corporate tax slab from 30% to 25 % is a much awaited baited breath for the realty spectrum. The whole budget was objectified for the purpose of economic welfare and building sound administration system to ward out mismanagement. The overall objective was to narrow the gap between rural and urban divide and create a harmony in holistic development as the economic indicators projects to freeze the fiscal deficit to 3 % in the next three years with a target growth rate of 7.4 % GDP is highly appreciated to augment the trajectory growth path.” M.R Jaishankar, CMD, Brigade Group But as far as Housing industry is concerned, there is no special encouragement inspite of ‘Housing for All’ vision. To that extent for our industry, the budget is disappointing.” Sachin Sandhir, Global Managing Director - Emerging Business & MD - South Asia, RICS RICS views budget 2015-16 as a positive incremental budget focused heavily on boosting infrastructure investment, though not necessarily a big bang one as envisaged. The government has perfectly capitalised the opportunity by ushering in clarity on taxation of rental income arising from REITs, currently viewed as a life-saver for the ailing cash-strapped real estate industry. The clarity on REITS is crucial as it is expected to have a far-reaching implication in foreign investment flows, bank funds and could also provide opportunities for domestic investors to invest in debt returns from income-yielding assets. It is a welcome move that now the rental income arising from assets owned by the REIT will be allowed to pass through and be taxed in the hands of the REIT unit holders. Earlier, only partial pass through was provided to REIT’s and INViTs. However, in a major disappointment, no clarification was provided on the role of managers and valuers of assets under REITs, which globally are independently valued by professionally certified valuers. While the Finance Minister has done well by coming down heavily on black money transactions in real estate by proposing introduction of 'Benami Transaction prohibition Bill', he has given a total short shrift to real estate sector's crying demand for an 'industry status'. The industry status could have eased the flow of bank loans towards the sector already under a severe cash crunch. Also, despite the requirement of 2 crore houses required for rural areas and 4 crore homes in urban areas and the vision of housing for all by 2022, the budget was somewhat disappointing when it comes to incentivising liquidity and reviving the housing sector. A clear roadmap or clarity on the outlay for undertaking this construction activity of mammoth scale should have also been included in Mr Arun Jaitley's Budget speech. While there is no direct benefit to housing and real estate, the reduction of corporate tax rate from 30% to 25% will benefit the industry at large. A follow on the last year's Budget announcement on smart cities should have made into the Budget 2015-16 as well. A clear roadmap on the development of proposed 100 smart cities, which was closely awaited by the industry has not found any mention in the Budget, other than assurance of GIFT city as a model smart city by March 2016. |
||
Home »
Budget 2015-'16
» BUDGET 2015 - 16: NO GAME CHANGER FOR INDIAN REAL ESTATE
BUDGET 2015 - 16: NO GAME CHANGER FOR INDIAN REAL ESTATE
BUDGET 2015 - 16: NO GAME CHANGER FOR INDIAN REAL ESTATE...
No comments:
Post a Comment