‘Budget fails to confer industry status to realty sector’

Higher service tax from 12.36 to 14 per cent will increase the cost of housing

March 01, 2015 02:36 am | Updated November 16, 2021 05:15 pm IST - MUMBAI:

The sector feels an opportunity was missed and some long pending demands such as removal of DDT and MAT in SEZs, reintroduction of Section 80–IB for low cost housing and the like were ignored.

The sector feels an opportunity was missed and some long pending demands such as removal of DDT and MAT in SEZs, reintroduction of Section 80–IB for low cost housing and the like were ignored.

The budget failed to bestow infrastructure or industry status to the real estate segment or the affordable housing segment and there are only few positives from the thrust on infrastructure, which could benefit the real estate sector.

The Finance Minister said the government proposed to build two crore houses in urban areas and four crore houses in rural areas under the ‘Housing for all by 2022’ scheme. This could potentially boost the sector.

L. K. Jain, Chairman, Confederation of Real Estate Developers Associations of India (CREDAI), said, “It is all fine to talk about policies and visions like housing for all by 2022, but sadly the budget does not give any direction towards executing this.’’

With regard to Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (INViTs), the Finance Minister said the treatment granted to the sponsor on offloading of units at the time of listing will be same as that granted if the shareholding of the special purpose vehicle (SPV) had been offloaded at the stage of direct listing. Further, rental income from real estate assets directly held by REITs are proposed to be allowed to pass through and taxed in the hands of the unit holders of the REIT. But, the sector feels an opportunity was missed and some long pending demands such as removal of DDT and MAT in SEZs, reintroduction of Section 80–IB for low cost housing and the like were ignored.

The demand for infrastructure status to affordable housing and home loan interest rate subvention schemes to propel demand for affordable housing was not heeded. Higher service tax from 12.36 to 14 per cent will increase the cost of housing.

“We expected the government to come out with realty reforms but we were disappointed. Instead, the Finance Minister proposed an increase in service tax which will lead to increase in cost of housing,’’ Mr. Jain said. On the positive side, the withdrawal of wealth tax could boost investments by the middle-class and some sections of high net-worth individuals. Lowering of corporate tax by 5 per cent in the next few years could attract investments.

budget 2015

Here are sector-wise highlights

Taxation

Infrastructure

Education

Welfare schemes

Agriculture

Rural Infrastructure Development Bank Micro Irrigation Programme Targeted for farmer credit

Defence

allocated for defence (an increase of 9.87 per cent over last year)

Renewable energy

electric cars production Solar power Wind power Bio Mass Small Hydro

Tourism

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