The much aggrieved real estate sector may get some relief with the Union Budget waiving off Service Tax for houses built under 60 square metres, besides offering additional exemption of Rs 50,000 for housing loans up to Rs. 35 lakh, provided cost of house is not above Rs 50 lakh.
The industry that has been in doldrums for long, facing protracted slump has been looking for some incentives to beat the downturn and banking on the government's ambitious 'Housing for All' scheme by 2022.
HIGHLIGHTS:Union Budget 2016
Industry analyst said that there was some relief to the sector though the Budget offered no financial protection from project delays to home buyers.
FULL COVERAGE:Union Budget 2016
Other major recommendations:
1. Government has increased the HRA deduction for the salaried to Rs 60,000 from the current 24,000/ month.
2. 100 per cent deduction for profits to an undertaking from a housing project for flats up to 30 square metres in four metro cities and 60 square metres in other cities will benefit developers in the low-cost housing space.
3. Excise duty exemption on Ready Mix Concrete (RMC) will lower the cost for housing construction and in turn, encourage builders to pass on the benefits to home buyers.
4. The Rs 50,000 tax exemption is applicable only on houses worth up to Rs. 50 lakh with loans of up to Rs. 35 lakh, but only for first-time home buyers.
5. It has removed Dividend Distribution Tax (DDT), clearing a final hurdle on the way of the successful listing of real estate investment trusts (REITs) in India.
Amit Modi, Vice President CREDAI, Western UP said, "Budget 2016 has been great on infrastructure, same is however not the case when it comes of Real Estate and Housing. The government ignored our long pending demands like single window clearance and 'Industry Status' to Real Estate Sector that would have helped us to avail low cost funding through banks and other financial institutions. We will prefer the interest rebate of Rs 50,000 for first time home loans to have the ticket size of at least Rs 1 crore, since the average apartment cost in cities like Delhi and Mumbai are a lot more than Rs 50 lakh as specified by the government."