Union Budget 2019 India: With different sectors reeling under stress owing to slowdown, NBFC crisis, global concerns and mounting NPAs, Nirmala Sitharaman is expected to propose measures to revive the economy.
Union Budget 2019 India: With different sectors reeling under stress owing to slowdown, NBFC crisis, global concerns and mounting NPAs, Nirmala Sitharaman is expected to propose measures to revive the economy. Even the real estate sector, a key contributor to the GDP, is pinning hopes on Finance Minister to provide tax benefits, lower interest rates to boost affordable housing, along with other benefits to kick start the sector. The industry expects the budget to come up with further tax sops to both homebuyers and investors.
“While the interim budget in February did try to woo back investors and buyers alike by offering some sops, there need to be more direct benefits by way of reduction in income tax slabs, higher relief on housing loan rates, and an increase in the deduction limit under Section 80C from the current INR 1.5 lakh a year,” Anuj Puri, Chairman, Anarock said.
The government may revise the deduction limit under Section 80C since it was last hiked in 2014 after a gap of a decade. Even though it is likely to put more burden on the exchequer, it is expected to boost purchasing power of buyers, he added.
Besides, the government also needs to look into financing funding of land for affordable housing by banking system, the industry said. “With the advent of RERA one cannot sell until all approvals are received which means that one needs funding either by way of promoter equity or private equity. Land funding is typically done by NBFC’s or private equities with cost to developers going up to 25% per annum making housing unaffordable. The support of the banking system is needed to bridge this gap,” Satish Magar, President, CREDAI National said.
To promote affordable housing, the funding of land by commercial banks should be resumed by the RBI, he added.
Meanwhile, the government is mulling over measures including increased tax benefit to promote purchases, lower interest rates for affordable housing, a media report said.