Budget 2017-18 Gives A Boost To Affordable Housing
The Budget that was
being touted as a make-or-break one for the future of India, and the Government
made some big announcements on the infrastructure front and also on beneficial
changes to the affordable housing segment.
The Budget missed out on
giving any additional income tax incentives to first-time home buyers or
providing higher tax savings on housing loans and house insurance premiums.
Nor
did it raise house rent deduction limits. However, it did provide some direct
tax relaxation to the lowest income earners, and gave some clarity on the
designated beneficiaries under the Pradhan Mantri Awas Yojana.
 |
| Anuj Puri, JLL India. |
A new Credit
Linked Subsidy Scheme (CLSS) for the middle-income group with a provision of Rs. 1,000 crore in 2017-18 was announced.
Also, extension of tenure of loans
under the CLSS of Pradhan Mantri Awas Yojana (PMAY) was increased to 20 years
from the existing 15 years.
Moreover, one crore
houses are to be built by 2019 in rural India for the homeless and those living
in ‘kaccha’ houses.
Allocation to PMAY has been increased from Rs. 15,000 crore
to Rs. 23,000 crore in the rural areas – and affordable housing will now
finally be given infrastructure status.
This is very significant, because it
will provide the vital budget housing segment with cheaper sources of finance
including, but not restricted to, ECBs (external commercial borrowings). Also,
re-financing of housing loans by NHBs (National Housing Bank) can give a leg up
to the sector.
Under the latest
provisions, developers to get one year’s time to pay tax on notional rental
income on completed unsold residential inventory. The time limit for capital
gains to be considered as a long term gain has been reduced to 2 years from the
earlier 3 years. More supply will enter the housing market now.
The applicable
exemptions for affordable housing will now be recognized on the basis of carpet
area of 30 square meter and 60 square meter instead of on the basis of saleable area.
The
30 square meter limit will only be applicable within the corporation limits of the 4
major metros. For fringe areas of these metros and all other cities, it will be
60 square meter on carpet area. This will effectively serve to increase the increase
the number of projects falling under this segment.
Promoters of affordable
housing projects will benefit from the following announcements:
· Instead of the earlier timeline of completing
their projects within 3 years, they now have a cushion of two additional
years.
· JDs liability to pay capital gains tax will be
in a year after the project is constructed. This will be beneficial for land
owners and land prices can ease; this benefit can be passed on to home buyers.
On the infrastructure
front, a total investment of INR 3,96,135 cr was announced in the Budget 2017-18.
Budget allocation for highways will go up to Rs. 64,000 crore in 2017-18 (FY18) from the
earlier Rs. 57,676 crore.
Allocation for national highways has been stepped up
to Rs. 64,000 cr from Rs. 57,676 cr. The rural roads’ construction work will be
accelerated to 133 km of roads per day in 2016-17, as against 73 km per day during
2011-14. A new metro rail policy will be announced.
On
the FDI front, the FIPB (Foreign Investment Promotion Board) is set to be
abolished and a new roadmap is to be announced in the next few months. This
will give the real estate sector access to significantly more funding than it
has today. A new FDI policy is under consideration, which promises to
liberalize the FDI regime further.
About the author..!
No comments:
Post a Comment