Housing demand and supply will rise, helping the real estate sector to revive from multi-year slowdown, on the back of tax sops announced in the interim Budget for individual taxpayers as well as developers, realty firms and property consultants said Friday.
"The Budget is a dream come true for real estate. Above all, freeing incomes up to Rs 5 lakh from income tax which potentially means exemptions on incomes of Rs 6.5 lakh or more, increases the purchasing power and the power to invest in the hands of the consumer capable of flowing into housing," said Jaxay Shah, the President of realtors' apex body CREDAI.
The benefits such as relieving second houses from income tax on notional rent and exempting second homes investment from capital gains would revive the sluggish demand for housing, he added.
"Increasing the TDS threshold to Rs 2.4 lakh and allowing two years exemption from notional rent on unsold inventory remove major irritants. Section 80IBA extension by one year is a boost to affordable housing," Shah said, and hoped that the GST on under-construction homes would also be reduced soon.
Niranjan Hiranandani, President of NAREDCO, said the affordable housing segment would get a boost. He said the extension by a year of Section 80-IBA of the Income Tax Act, would play a major role in helping achieve the target of 'Housing for All by 2022'.
ANAROCK Chairman Anuj Puri said it was a balanced budget for real estate sector as it provides tax incentives to boost demand and supply. However, he rued that there were no "announcements with regards to clearing the NBFC deadlock which continues to hold the real estate sector to ransom."
Industry status for the real estate sector, while not really expected, was ignored again, he said, adding that the stressed fund for stalled projects was also not created.
Anshuman Magazine, Chairman & CEO, India, South East Asia, Middle East & Africa, CBRE, said the interim Budget has many provisions for the recovery and further expansion of residential real estate in the country.
The announcement for full tax rebate up to an income of Rs 5 lakh will provide homebuyers more disposable income and open more investment opportunities.
"The new policy for no tax on notional rent on the second house, and the tax waiver announced for rental income up to Rs 2.4 lakh per annum will accelerate the recovery in the real estate sector," Magazine said.
Ramesh Nair, CEO and Country Head, JLL India, said: "The year 2019 has started on a good note for Indian real estate."
With improved liquidity of taxpayers, demand across the affordable and mid-income housing segment will rise.
"Incentivising developers, the Interim Budget announced an extension in the approval time by one year to claim 100 per cent tax deduction on profits from affordable housing projects u/s 80-IBA."
This extension within the deadline of March 2020 not only ensures continued interest of developers involved in the construction of affordable housing projects but will also attract new companies to this segment, he added.
Shishir Baijal, CMD, termed the budget as very positive. "We are pleased to see that the government has taken note of the issues faced by the real estate sector and has addressed them systematically. It has addressed both the demand and the supply side of the sector."
Dhruv Agarwala, Group CEO of Housing.com, Makaan.com and PropTiger.com, said the move to give a full rebate to the middle class with income up to Rs 5 lakh is a very positive move and will be helpful in increasing disposable income for an affordable housing buyer planning to purchase a real estate asset.
Sobha Ltd Vice Chairman and MD J C Sharma said the interim Budget proposals would create a favourable environment for homebuyers and developers.
Puravankara Ltd MD Ashish R Puravankara said: "An observed pattern in India is, increased savings bring people closer to their aspiration of becoming homeowners. This, of course, augurs positively for the Affordable Housing segment and will go a long way in addressing the housing issues of the nation".
Sanjay Dutt, MD & CEO, Tata Realty, said the Interim Budget 2019 has remained focused on the nation's economic growth and brings a positive sentiment in the real-estate industry.
"With no notional rent levied on second self-occupied homes and the capital gains up to Rs 2 crores which can be used for buying up to 2 houses, provide much-needed impetus to the demand for homes. The deductions announced under Section 80IBA have been extended to projects which will be registered by March 2020-this again paves the way for new launches," Dutt said.
NBCC CMD Anoop Kumar Mittal said: "The government's endeavour to significantly reduce the tax burden on home buyers is highly commendable." RK Arora, Chairman, Supertech, said the Budget has taken steps to improve the lives of almost every Indian.
Anshul Jain, Country Head & MD, Cushman & Wakefield India, said the full tax rebate limit for income-earners up to Rs 5 lakh would put in more money in the hands of the salaried class and provide some boost to demand for affordable housing.
Sunny Kataria, VP Real Estate, OLX India, said: "We expect the budget this year to significantly aid the rental market in terms of increased availability of rental homes.