The Union Budget proposed by financethe minister, Mr. Arun Jaitley has provided a warmth amid the cold winter, especially for real estate developers across the country. The budget provides infrastructure status to the real estate sector which assures that the property market will receive government incentives, tax benefits and subsidies. What more, Developers can also get bank loans at minimal rates – a massive boost to the real estate as an industry sector.
Getamber Anand, National President, CREDAI says, “Affordable housing getting infrastructure status will enable efficient supply of housing stock in the country and provide benefits associated with it.” Mr. Anand’s statement strikingly evidences the following policy benefits,
The Industry status also means that both the owner of the land and the developer can remain worry free on any risks related to lands, and ensure transparency. The Joint Development project would encourage interested land owners to offer their lands to the developers, a sign of a potential growth in the real estate sector.
Land transactions given a boost – According to JDA (Joint Development Agreement), the new tax reforms would result in making a significant impact leading to increase in the allocation of land to the property landscape. This is also highly indicative of resulting in easing and greatly improving the land transactions.
A welcoming change for the developers is that the buying window for affordable housing has been changed from built-up area to a carpet area. In metro’s, the applicable calculated limit stands at 60 sq.mtr in metros and border areas of the four metropolitan cities, whereas in the rural parts the limit applicable is 30sq.mtrs. A great news for the developers is that tax on notional profits are deferred. Tax is incurred only after one full year and upon the completion of a project with a completion certificate.
In a measure to provide tax relief to developers, the holding period has been reduced from 3 years to 2years. This move helps investors in the property market who have stocked more inventory to be relieved from tax on capital gains from 3 years to 2 years.