Piyush Goyal as the interim Finance Minister presented the Union Budget in Lok Sabha on Friday, February 1. The budget brings good news to almost all the sectors while benefiting every individual.
Real estate also seems promising with the points added in the latest budget plan. Here is a look at the main points concerning real estate in India.
- The budget does not disappoint on the messaging for the real estate sector. The sector has had certain regulatory and structural changes over the past few years and is looking for ways to ease the burden on developers, lenders, investors, and home buyers. With this year's budget, the government finally acknowledges the need to reduce the GST burden on home buyers. The Group of Ministers have been examining and making recommendations to the GST Council.
- Concerning the sale of under-construction residential properties, GST has been high with low yield. The government’s move to exempt levy on notional tax is significant relief from tax liability for the buyer who doesn't have any real income. This move is mainly going to benefit migrant workers relocating to the metros and drive residential sales in Tier-II and Tier-III cities. The exemption from notional tax will benefit homebuyers who are looking to invest in more than one residential property. As a result, residential sales are expected to grow, especially in peripheral locations of Tier-I cities.
Also Read:
- With an aim to give some relief to the developers, the government has extended the exemption of levy of tax on unsold inventories to two years. Earlier, it was one year. The benefit also extends to the projects as per under Section 80-IBA of the Income Tax Act approved till 31st March 2020.
- What about the development of connectivity and infrastructure? The government encourages participation and collaboration with private sectors in the work of 6 non-metro airports. This move is also expected to accelerate the pace of development in the concerned smaller regions, with the main focus on North East part of the country, which will simultaneously create demand and jobs in sectors like retail and hospitality.
- The government looks forward to more enhancement on rural connectivity, and with schemes like PM-KISAN, a boost will be seen on rural income while increasing the demand for sectors like warehousing and logistics to support sectors like FMCG.
- The government also brings an effect on the new e-commerce regulations barring online marketplaces from selling products of related entities and exclusive marketing arrangements, which could add 150-200 Business Process Services to brick-and-mortar retail revenues in the fiscal year 2020, as per Crisil – encouraging developers to invest in the development of retail real estate.
- The government will work to inject more liquidity in the economy and aims to stimulate savings and consumption by leaving more funds with taxpayers. Technology is one sector which is one of the largest occupiers of commercial real estate in India. For India to retain its competitive edge in the global technology landscape, the government also forms a National Programme on Artificial Intelligence as a step towards innovation.