In Union Budget 2017, Finance Minister Arun Jaitley reserved his best for the real estate sector, which witnessed a slump post demonetisation.
Giving affordable housing an infrastructure status, the Finance Minister gave aam aadmi and real estate developers enough reasons to cheer.
Arun Jaitley's announcements on urban and rural housing:
Proposal to create 1 crore houses for the poor by 2019.
National Housing Bank will refinance housing loans up to Rs 20,000 crore
Pradhan Mantri Awas Yojana, which was launched in 2015 to achieve government's mission of 'Housing for All by 2022', will get Rs 23,000 crore. The scheme will be extended to 600 districts
Under affordable housing, the carpet area of 30-60 square meters will now be applicable as against built-up area of 30-60 square meters-- an area increase of 20 per cent
Capital Gains Tax holding period for immovable property reduced from three years to two years
Sops to affordable housing extended from three years to five years
INDUSTRY WELCOMES ANNOUNCEMENT ON AFFORDABLE HOUSING
"Affordable housing developers will now be eligible for several government incentives, subsidies, tax benefits, and most importantly, institutional funding. The status could also mean that the government may release land specifically for affordable housing development in central locations of major urban centres in India," said Neeraj Bansal, Partner and Head of Real estate and Construction in KPMG in India.
"With the infrastructure status, developers can access foreign funds at a cheaper cost by way of debt and it will be a priority lending for banks as well. This should result in progress in the sector," said Hemal Mehta - Partner - Deloitte Haskins & Sells LLP.
Experts said the move will not only allow access of cheaper loans for developers of budget housing but significantly boost the sector in achieving the government target of 'Housing for All by 2022'.
The Finance Minister also reduced the holding period for land and buildings from three years to two years for long-term capital gains purpose. "This would help improve investability in properties in comparison to shares and stocks where the period is one year," Bansal added.