Along with a slew of measures to boost the economic slowdown, Finance Minister Nirmala Sitharaman announced initiatives that will work towards the benefit of the real estate sector. Not all the concerns of those working in the real estate industry received answers in this budget, but through the measures that have been declared, one can consider the positives that will follow. According to the Union Budget 2020, India’s infrastructure will see an incredible amount of growth over the next year. A considerable portion of the budget has been allocated towards establishing and improving tourist sites across the country.
Alongside this, the focus will be placed on bettering strategic highways and developing economic corridors. The National Infrastructure Pipeline was also announced, which includes work on 6,500 projects across the country. These initiatives will encourage the advancement of infrastructure within the nation, which can lead to a number of developments in the real estate sector. As the government is working towards providing a boost to industry and commerce, the commercial real estate sector will face the immense potential for growth. Plans for 100 more airports have also been announced, increasing the scope of growth across states.
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The Affordable Housing initiative was also a point of focus in the Union Budget, extending the tax benefit for affordable home buyers under section 80EEA, for deduction up to Rs 1.5 lakhs against interest payment by one year. Additionally, FM Sitharaman also proposed a time extension to claim a 100% tax deduction on profits from affordable housing projects until March 2021 under section 80IBA. This extension in the dateline will ensure the continued interest of developers in affordable housing.
However, the introduction of the new optional tax slab regime might make the tax adjustment process rather complex. Streamlining and revising is essential for the same, in order to promote a unified method of tax payment across the nation. But, all the initiatives acknowledge the betterment of the core of the nation by encouraging the commercial sector. Due to this, warehousing and other commercial real estates will see a boost, and as an extension, so will the residential sector.
Further encompassing the FM’s vision, RBI in their bi-monthly addressed the concerns of the real estate sector with the decision to permit extension of the date of commencement of commercial operations (DCCO) of project loans for commercial real estate. Since this extension will not allow the formation of NPA accounts, it will provide relief to builders whose commercial projects have faced genuine hindrances. During this period, they can recuperate and concentrate on the completion of these projects. Additionally, the GDP growth of 6% anticipated by the RBI also keeps us optimistic for the financial year ahead.
Hakim Lakdawala is Group Promoter, Goodwill Developers. Views expressed are the author’s personal.