by Ms. Tripti Rai
By the end of the year 2020, India is going to ride high on Ache Din as far as the real estate scenario is concerned.
The dream of a home for every Indian by the starting of the said golden year is not that far-fetched or an anticipated gimmick to gain votes any more. The new Modi government has taken over the real estate market segment with zeal and vigor.
While the common man is benefited from the increase in property options at a much lower price, developers are emerging as the direct beneficiaries due to the rise in foreign funds.
The snippets of new FDI investment plan in the Budget of year 2014-15:
· Basic exemption..!
The basic tax exemption limit has been raised from 2 lakhs to Rs. 2.5 lakhs; and for senior citizens (above 70 years of age) it is raised to Rs. 3 lakhs. So even a senior citizen in 30% tax bracket can save Rs, 5,150 in taxes.
· Exemption u/s 80C..!
The tax exemption u/s 80C has been raised from Rs.1 lakh to Rs.1.5 lakhs. This will result in savings of Rs.5,150 (for those who are in 10% tax bracket), Rs.10,300 (for those who are in 20% tax bracket) and Rs.15,450 (for those who are in 30% tax bracket).
Repayment of principal part of EMI on home loan, PPF, EPF, contribution to life insurance premium and fixed deposits having five years maturity are the few financial heads which enjoy exemption under this head.
· Exemption u/s 24..!
The tax exemption limit u/s 24 for interest on home loan for self-occupied home is raised from ₹1.5 lakhs to Rs.2 lakhs.
· Investment in PPF..!
The investment limit in Public Provident Fund has been raised to Rs.1.5 lakhs. It will benefit the conservative investors who opt for risk free investment to build a bigger corpus for their later years.
· Relaxation in FDI..!
Liberal norms for FDI and tax incentives for REITs (Real Estate Investment Trusts) are the two additional sops realty sector has got from this budget.
The budget proposed to allow foreign direct investment (FDI) in projects of 20,000 sqm (earlier it was 50,000 sqm) and raising the upper limit on FDI from $5 million to $10 million with a three-year lock-in period after completion.
It is expected to attract finance from foreign sources and therefore results in more flow of cheaper funds to this sector.
How is it beneficial for you and me?
In layman terms, FDI is good!
More funds = More developments = More property options.
It’s that simple.
The opportunity to invest in a house in the top metropolitan cities will become much easier with the revised FDI plans. As, these cities are known to witness maximum expats from other cities because of job opportunities, high infrastructure development etc.
The scenario that these cities are currently facing is only going to increase in terms of demand. Thus, the present time is good for investment in any new project in Pune or for buying property in Bangalore.
Impact of FDI in Real estate on other strata of the economy
1. The increasing of FDI limit from $5 Billion to $10 Billion is going to make the transfer of funds much faster and easier. This is going to have a ripple effect when it finally comes down to us. Taking all the intermediaries like the builder group, finance sector etc. on a high ride.
2. Call for real estate professionals who can handle the sudden increase in demand India is going to witness starting the year 2015, is going to be huge. This will open more avenues for the real estate professionals.
3. Along with the dream of a house for all, year 2020 is also going to witness the beginning of smart city concept in India. As these both events are going to occur around each other, foreign investments for modern technologies and new methodologies can also be expected.
This is going to be good for both the research people and also the real estate intermediaries.
The dream of a house for everyone by the year 2020’ has come one-step closer to reality with the inception of FDI in this segment.
FDI in real estate is not only going to bring in multi-national corporate, the other positive effects are manifold too.
Along with an increase in number of developers, the Indian realty standards in terms of design, layout, and, delivery, etc. is also going to change positively.
The snippets of new FDI investment plan in the Budget of year 2014-15:
· Basic exemption..!
The basic tax exemption limit has been raised from 2 lakhs to Rs. 2.5 lakhs; and for senior citizens (above 70 years of age) it is raised to Rs. 3 lakhs. So even a senior citizen in 30% tax bracket can save Rs, 5,150 in taxes.
· Exemption u/s 80C..!
The tax exemption u/s 80C has been raised from Rs.1 lakh to Rs.1.5 lakhs. This will result in savings of Rs.5,150 (for those who are in 10% tax bracket), Rs.10,300 (for those who are in 20% tax bracket) and Rs.15,450 (for those who are in 30% tax bracket).
Repayment of principal part of EMI on home loan, PPF, EPF, contribution to life insurance premium and fixed deposits having five years maturity are the few financial heads which enjoy exemption under this head.
· Exemption u/s 24..!
The tax exemption limit u/s 24 for interest on home loan for self-occupied home is raised from ₹1.5 lakhs to Rs.2 lakhs.
· Investment in PPF..!
The investment limit in Public Provident Fund has been raised to Rs.1.5 lakhs. It will benefit the conservative investors who opt for risk free investment to build a bigger corpus for their later years.
· Relaxation in FDI..!
Liberal norms for FDI and tax incentives for REITs (Real Estate Investment Trusts) are the two additional sops realty sector has got from this budget.
The budget proposed to allow foreign direct investment (FDI) in projects of 20,000 sqm (earlier it was 50,000 sqm) and raising the upper limit on FDI from $5 million to $10 million with a three-year lock-in period after completion.
It is expected to attract finance from foreign sources and therefore results in more flow of cheaper funds to this sector.
How is it beneficial for you and me?
In layman terms, FDI is good!
More funds = More developments = More property options.
It’s that simple.
The opportunity to invest in a house in the top metropolitan cities will become much easier with the revised FDI plans. As, these cities are known to witness maximum expats from other cities because of job opportunities, high infrastructure development etc.
The scenario that these cities are currently facing is only going to increase in terms of demand. Thus, the present time is good for investment in any new project in Pune or for buying property in Bangalore.
Impact of FDI in Real estate on other strata of the economy
1. The increasing of FDI limit from $5 Billion to $10 Billion is going to make the transfer of funds much faster and easier. This is going to have a ripple effect when it finally comes down to us. Taking all the intermediaries like the builder group, finance sector etc. on a high ride.
2. Call for real estate professionals who can handle the sudden increase in demand India is going to witness starting the year 2015, is going to be huge. This will open more avenues for the real estate professionals.
3. Along with the dream of a house for all, year 2020 is also going to witness the beginning of smart city concept in India. As these both events are going to occur around each other, foreign investments for modern technologies and new methodologies can also be expected.
This is going to be good for both the research people and also the real estate intermediaries.
The dream of a house for everyone by the year 2020’ has come one-step closer to reality with the inception of FDI in this segment.
FDI in real estate is not only going to bring in multi-national corporate, the other positive effects are manifold too.
Along with an increase in number of developers, the Indian realty standards in terms of design, layout, and, delivery, etc. is also going to change positively.
Author Bio:
Ms.Tripti writes
on the behalf of 99acres.com. Her articles talk about new developments in the
real estate industry. She is an avid fiction reader, craftsman and a keen
observer. Being someone who just observes without having a point of view, she
keeps herself updated in real time. You can reach her on G+ and LinkedIn
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