As Finance Minister Arun Jaitley today presented the Union Budget 2017-18, there had been mixed reactions from various sectors of the country. Prime Minister Narendra Modi lauded this year’s budget claiming that it will lead the country towards development and stated that this year’s budget is devoted towards strengthening the hands of the poor. While on the other hand, Congress vice-president Rahul Gandhi slammed FM Jaitley’s Budget and stated that it lacked a clear vision and had nothing for farmers, youths and job creation. Presenting the Union Budget 2017, FM Arun Jaitley announced that he will reduce the tax rate of individuals earning between Rs 2.5 lakh to Rs 5 lakh to 5% from the current 10%. This would also translate into an additional benefit of Rs 12,500 for tax payers even beyond Rs 5 lakh. FM Jaitley further said that political parties continue to received funding from anonymous sources, and hence reduced the maximum donation that a political party can receive in cash is Rs 2,000 from any one source. He added that no transaction of more than Rs 3 lakh will be permitted in cash.
Here is the post-budget quote by Shishir Baijal, Chairman and Managing Director of Knight Frank India:
“This has been one of the path breaking budgets with far reaching changes especially for the real estate sector. It is positive that the real estate sector has come in the central spectrum of the Union Budget. This has come at a time when the beleaguered sector has been looking at measures to boost the sentiments. The real estate sector which was the hardest hit by demonetisation move will be one of the major beneficiaries of this budget. Prudence in fiscal discipline is welcome and will encourage RBI to look at a lower interest rate regime that will provide the much needed fillip to this stressed sector.
Increased focus on infrastructure especially construction of new roads, improvement of existing roads and coastal connectivity will go a long way to benefit the real estate sector.
Increase in allocation of funds under PMAY (Pradhan Mantri Awas Yojana) shows the focus of government towards making Housing For All a reality by 2020. Providing infrastructure status to Affordable Housing, a long standing demand of the real estate industry will not only bring the cost of financing down but will also open up additional avenues for developers to raise funds. We believe that the shift in eligibility criteria for Affordable Housing from built up area to carpet area will increase the unit size by 20-30% and will offer home buyers the benefit of owning larger units. This will also encourage leading real estate players to enter the Affordable Housing segment.
The move to reduce the tenure of the Long Term Capital Gain tax from 3 years to 2 years is extremely welcome and will help the marketability of real estate as an asset class.
Changes in the taxation aspect of JDA (Joint Development Agreement) will greatly encourage more land owners to partner with developers that will benefit the real estate developers and in turn likely to benefit the end consumers. ”