The past few years have been difficult for the Indian real estate sector with the market going through a general slump in regards to housing demand. The government has a grand vision of making the Indian economy a USD 5 Trillion in the next five years. In this scenario, the real estate segment will have an important role to play in boosting the economy.
Keeping in mind some of the demands that the real estate industry had put forth to the government, the new Finance Minister, Nirmala Sitharaman, in the short time period available to her to present the first budget of the Modi 2.0 government, managed to meet some long-standing expectations of the real estate industry.
Here are the key takeaways from the Union Budget 2019 for the real estate sector.
- Enhanced focus and tax exemption on affordable housing
The government has been singularly focused on making housing affordable to all sections of the society. Through the Pradhan Mantri Awas Yojana the aim is to achieve this target of affordable housing for all by 2022. In view of this task, the government has sanctioned over 81 Lakh houses under the PMAY-Urban scheme and an additional 1.95 crore houses have been proposed to be provided under the PMAY-Rural.In addition to these measures, a tax exemption of Rs 1.5 Lakhs has been provided to buyers on home loans under affordable housing. The government has increased the tax deduction benefit, up to Rs 3.5 lakhs as against Rs 2 lakhs earlier, against interest on home loans taken till March 31, 2020 for affordable housing having a value of up to Rs 45 lakhs. These tax benefits are aimed towards increasing demand.
- Support for skill development
The real estate sector has been long demanding government support for skill development initiatives to train skilled workers to handle new-age technologies and tools. In the 2019 budget, the government has declared many measures to widen the skill development program under ‘Pradhan Mantri Kaushal Vikas Yojana’ that aims to train 10 million youth to take up industry oriented training and acquire various skillsets in AI, big data, VR, 3-D printing, etc.
- Boost to infrastructure development
Sound infrastructure plays a big role in boosting the prospects of the real estate sector. The union budget 2019 has announced major infrastructure projects across India such as improving and constructing roads, expanding suburban railways and Metro connectivity, creating an expansive water management system, etc.
The government is targeting an infrastructure investment of Rs 100 lakh crores in the next 5 years with Nirmala Sitharaman highlighting transit-oriented developments (TODs) and a proposed ‘One Nation One Grid’ initiative across the country.
- Reforms to Model Tenancy Law
In an effort to boost rental housing and protect the interest of investors who are looking for rental income, several reforms have been proposed under the Model Tenancy Law to replace the current archaic rental laws with a modern, uniform tenancy law, with corresponding tax incentives that will do justice to both the owner and the renter.
- Revival of NBFC’s
The government announced many measures, including a one-time, six-month credit guarantee for the purchase of pooled assets, of highly rated non-banking financial companies (NBFCs) up to Rs 1 lakh crore. These measures are an effort to revive the NBFCs from the ongoing debt crisis and liquidity crunch.
They would also revive the lending activity and sustained flow of capital, for sustainable and well-performing NBFCs. To further boost the liquidity of NBFCs, the government has allowed FIIs and FPIs to invest in debt papers of NBFCs.
- Reduction in corporate tax
Another long term demand from the industry was that of a reduction in corporate tax. The government has taken note of this in the union budget 2019 and has allowed companies having a turnover up to Rs 400 crores, to pay a lower tax of 25%.
It is expected that the provisions for real estate in budget 2019 should help boost the sector in terms of increased sales. The Pune real estate sector has many promising projects that will attract home buyers. One such premium residential project in Hinjewadi Pune is Park Connect from Pride Purple Group. Park Connect offers a superior living experience through elegant 2 BHK flats in Hinjewadi with all modern amenities. Park Connect is situated in the most strategic location with easy connectivity to Mumbai Pune Expressway, upcoming metro station, IT sectors, Hospitals, shopping destinations, and educational institutions, etc.