The reaction of the real estate industry has been pretty fragmented to the Union Budget. While a host of real estate developers were satisfied with the dividend distribution tax (DDT) set off, income tax slabs revision and the Cenvat reduction, as these would positively impact the real estate sector by leaving more money with consumers to spend and by reducing the input costs, another set of developers were disappointed by lack of any incentives to give an impetus to the low cost housing segment.
Niranjan Hiranandani, MD, Hiranandani Constructions said, ?The FM seems to have completely forgotten the third component of Roti, Kapda and Makaan to human need, which is Makaan. There has been absolutely nil efforts by the FM to provide benefits for low-cost housing. Moreover, the FM did withdraw certain benefits for small housing which was expected to get restored during this Budget as the housing values have gone up. But, that too has not been taken care of.?
Quite in contrast another section of the industry welcomed the Budget. ?Development of corporate debt market would give fillip to the corporate funding. DDT set off for dividend paid by subsidiary company to holding company, will do away with the double taxation on the dividend amount,? said Ramesh Sanka CFO, DLF Ltd.
Sanjay Chandra, MD, Unitech Ltd also emphasised, ?the construction costs are expected to come down due to duty and Cenvat reduction. The housing sector will get a boost due to the increase in income tax exemption limit to Rs 1.5 lakh and new tax slabs as it will increase the affordability of EMI?s pertaining to new and existing housing loans.?
?This Budget has ignored the increase of the ceilings on the deduction of interest paid on loans for acquisition and construction of residential houses from Rs 1,50,000 to Rs 3,00,000, deduction on house rental income to be increased from 30% to 50%,? Anshuman Magazine, CMD, CB Richard Ellis, South Asia Private Ltd said.
?With strong global inflationary headwinds and a possible global slowdown looming large, the FM has taken the right steps by reducing excise duties and initiated efforts to spur consumer demand. This would raise consumer spending and as a multiplier effect positively boost a host of sectors,? said Shravan Gupta of Emaar MGF Land.
According to Abhinandan Lodha, MD, Lodha Group, ?The finance minister has not announced any sops which would have directly impacted low and middle income housing in the metros. Meanwhile, the customs duty cut on project imports from 7.5% to 5% is a positive move to import more machinery to India as this will help allow more capital goods flow into the country.?
Anuj Puri, chairman and country head, Jones Lang Lasalle Meghraj explains, ?Thus Budget has not given much direct attention to the needs of the real estate sector, except in peripheral ways. There has been no mention on granting the sector industry status. Also, the fact that no decisive announcement has been made on the extension of the STPI scheme is discouraging, and of definite concern to and IT/ITES occupiers and developers, given that a large number of SEZs will take beyond 31st March?09 to be fully functional.?
