The real estate sector in India has been on a rapid growth trajectory as compared to past decades. However, Budget 2013 has apparently underwhelmed the real estate sector. As the finance minister said that India has faced huge fiscal deficit and there is a need to rationalise the expenditure; the Union Budget 2013-14 is a very controlled budget from the real estate sector point of view. It is not a big budget which could have encouraged the market as a whole.
The real estate sector contributes close to 7%, which is around Rs 140,000 crore to the GDP of the nation. However, it is still facing suffocation due to various administrative delays on varoius counts. There is a shortage of 270 lakh dwellings and by 2025, shelter would be of a matter of a huge concern for about 50 crore people."The real estate sector is one of the most important sectors to be affected by macro-economic changes in the country. Therefore, the annual budget of the nation is of prime importance to this sector, to determine the way forward: divulges Raj Sharma, MD, Best Property Deals.
Hence, there is a major challenge to bring back the growth rate at 8%. The budget gave a sign of relief to the real estate sector which was going through tough times by giving an extra Rs. 1 lath tax exemption on the first housing loan upto Rs. 25 lakhs though it wouldn't offer much help to those planning to buy a house in the metro cities or those who have already availed a housing loan earlier. Undoubtedly; this will boost housing sales in II-tier and III-tier cities, peripheral areas as well as distant suburbs of metro cities. Om Chaudhry, Chairman & CEO, Astrum Homes and Founder & CEO, FIRE Capital, is of the view that the finance minister could have relaxed the home loan interest rates which affects the end customers more than speculators.
However, the tax exemption will help in increasing the demand for affordable housing and encourage first time home buyers to buy or invest in the real estate sector across the country.
Another long term positive step which he has proposed is to set up an Urban Housing Fund with an allocation of Rs. 2000 crore which will infuse liquidity for urban housing, thereby boosting demand in urban centres. , Fitt on the other hand with the reduction in the abatement in service tax from 75% to 70% for homes that cost Rs.1 crore or above or are of 2.000 sq. ft or more in size would make the luxury housing more costly.
The TDS of 1% to be charged on the-transfer of immovable property is an obvious move to curb speculation and bring about improved reporting and accountability in high-value immovable property transactions. Considering that the TDS is to be charged on the gross transaction value rather than net gains, sellers will have a cash-flow impact in situations where the sales are at a loss or at zero/negligible gains property in delhi ncr.
One of the key announcements for infrastructure sector in the budget was setting-up of regulatory authority for road sector.This is a welcome step for road sector which is currently facing various issues.However, it is to be noted that one of the critical success factor for regulator in road sector would be defining its scope and role with clear guidelines."A regulatory authority in road sector has to be different from the ones in telecom, aviation or port sectors. In ease of road sector, as also announced by FM, the regulatory authority can be envisaged to focus more on addressing financial stress, construction risk and contract management since in road sector the user charge is pre -defined" emphasizes.
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