The government’s determined(ascertain/decide-निर्धारित) focus to make real estate as one of its key drivers has been amply(plenty/rich-बहुत) evident(perceptible /apparent-प्रत्यक्ष) in the last couple of years. The Union Budgets have played a significant role in this, augmenting (extend/surge-बढ़ाने) the sector with initiatives (step/ action-पहल) such as infrastructure status for affordable housing, extension of income tax benefits up to 60 sq metre-sized apartments, amendments in Real Estate Investment Trusts (REITs). Last year, these were further strengthened with the implementation(execution-कार्यान्वयन) of Real Estate (Regulation and Development) Act, 2016, (RERA) and GST, which have started impacting(effect/influence-प्रभाव) the sector positively.
This year’s Budget emphasizes(prominence/attention-ज़ोर) on the development of rural sector, agriculture, middle-class, micro, small & medium enterprises (MSMEs), infrastructure sector, senior citizens, healthcare and weaker sections of the society. The government aims to bring down the fiscal(financial/budgetary) deficit (deficiency/shortfall-घाटा) of 3.5% for FY18 to 3.3% for FY19. In addition, the government’s efforts to prioritise(emphasize/expedite-प्राथमिकता) investment in improving the healthcare, social infrastructure and agriculture is laudable(admirable/worthy-प्रशंसनीय). We, at Sobha, welcome such steps, as it will help sustain(uphold/maintain-बनाए रखना) long-term demand for housing and propel(motivate/induce-प्रेरित करना) a well-rounded growth of the economy.
One of the key and positive announcements(declaration) for the realty sector was the proposal to provide that no adjustment(match/adaptation-अनुकूलन) shall be made in a case where the circle rate value does not exceed 5% of the consideration(view/opinion-विचार). At present, taxation of income from capital gains, business profits and other sources with respect to transactions in immovable property is based on consideration or circle rate value, whichever is higher. The difference is considered as income for the buyers and sellers. This move will simplify real estate transactions.
Continuing with its focus on the affordable housing segment(section/part-खंड), the government will create a dedicated(committed/devoted-समर्पित) affordable housing fund in National Housing Bank(NHB). This announcement will further supplement (addition/augment-जोड़ देना) initiatives(step/action) such as rationalised GST of 8% for affordable housing and revised consideration(view / opinion) of carpet area of 30 and 60 sq metres instead of built-up area of 30 and 60 sq metres announced last year. Together, they will not only transform the affordable housing segment(portion/part) into the next big opportunity for Indian developers but also give a fillip(stimulus/ impetus-प्रोत्साहन) to the demand for housing in India.
Besides this, the proposal of dividend distribution tax of 10% on the equity-oriented mutual funds will be brought at par with long-term capital gain (LTCG) of 10%. This will create a conducive(favorable/beneficial-अनुकूल) environment for consumers to invest in a property. We believe that this will further strengthen the market sentiments(feeling/attitude-भाव).
Moreover, with the move to lower the tax slab from the earlier 30% to 25% for corporates with a turnover of up to `250 crore, the government has ensured(certain/establish-सुनिश्चित) that almost 99% of the MSMEs are covered under this bracket.
As one of the major contributors to India’s GDP, the primary demands of the real estate sector has been addressed adequately(sufficient/enough-पर्याप्त) through initiatives like RERA and on taxation through GST. This has enabled a favourable environment for homebuyers and developers.
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