Realty sector expresses mixed reactions over tax benefit

The housing industry had mixed reactions to the Union Budget with big players welcoming the government’s sustained push for affordable housing but noting that the real issues like the restructuring of loans have been ignored

Rajan Bandelkar, President, NAREDCO West & Director, Raunak Group said the real estate sector had pinned high hopes on the budget, as the sector has been reeling under pressure and is on the verge of collapse.

“The Budget has only two positive proposals for the sector viz. one more year of extension for approval of affordable housing projects for availing a tax holiday and extension of additional Rs 1.5 lakh tax benefit on interest paid on affordable housing loans.

But the sector’s key demands such as allowing restructuring of loans, the extension of a subvention scheme, raising the limit of Rs 45 lakh for affordable housing, scrapping of capital gains on the sale of properties, extending the timeline of capital gains, are not met with,” he said.

M R Jaishankar, Chairman and Managing Director of Brigade Group said the budget was high on vision but in the short term it would have been better to give more benefits to the consumer to increase demand.

“For the real estate sector which is undergoing major challenges for the past three-four years, the budget has fallen short of expectations.”

“The announcements for the sector were only an extension of the existing exemptions by a year. We wish the minister had increased the threshold for affordable housing definition from Rs 45 lakh to Rs 60 lakh. The SEZ sunset clause deserved an extension by a year or two,” he said but welcomed the removal of the Dividend Distribution Tax for the corporate sector.

Suresh Hari, chairman of CREDAI Bengaluru, said the days when “we expected something out of budget are gone”. Stating that the announcements were focussed on common man, he said he would like to see the positive side of the document.

“We have to wait for the details to emerge. I am looking at the opportunities we get from projects that may not be directly related to the housing sector. For example, the five smart cities to be built on the PPP model, the Bengaluru-Chennai expressway offer many opportunities for builders.”

“The rising of the income tax slabs may boost the market. At the end of the day, it may be very interesting for our sector as well,” he said.