It is good to see that Hon’ble Minister has started paying attention to real estate sector as he proposes some steps towards improvement of affordable housing segment. Tough, at first impression they look beneficial for the segment but on overall basis these are just last minute window dressing.
He has proposed allowing ECB for low cost housing and extension of interest subvention by one year on loan up to Rs 15 lakh on property cost up to Rs 25 lakhs. He has also proposed to decrease the withholding tax on affordable housing from 20% to 5%. Had he addressed our demand of bringing affordable housing under priority lending, it would have solved both the concerns i.e. shortage of capital as well as cost of capital for affordable housing.
Further, we demanded tax rebate under Section 80 IB (10) and also extension of completion period for the projects approved after the first day of April 2005 by two years as the economic slowdown hit almost all the projects launched during that period. There is no word on the same in the Union Budget. Our long pending demand of an infrastructure status to the real estate sector has also been turned down.
Moreover, application of TDS on the purchase and sale of property and increasing Service Tax by 2% will further add on to the overall cost of property and are bound to make property more costly in coming days. Therefore, I would say that there is nothing to cheer about in Union Budget rather it is a matter of concern for developers and buyers as a whole.
It is actually a very disappointing budget and we hope Hon’ble Finance Minister will pay a more focused attention to ground realities of the real estate sector during post budget proceedings since the sector has been a major driver for economic growth and has been generating countless jobs across its various verticals since years.
