Jayashree Kurup, Head of Content and Advisory, Magicbricks.com

BEFORE
We feel the Budget announcement should be to achieve four goals:

• Remonetise real estate to enhance consumer sentiment;
• Make finance available to industry to complete stalled projects;
• Make facilitating policy changes to give clarity to the proposed policies like GST;
• Create equitable tax structure to leave more money in the hands of the consumer to buy real estate.

To achieve these goals, the Budget needs to:

• Stimulate demand, through tax incentives to consumers so that they have more money in their wallet to buy real estate;
• Enhance tax breaks on property purchase by increasing the tax exemptions on housing loan principal and interest deduction;
• Offer financial protection from project delays by allowing Sections (80)C and (24) deduction on under-construction properties;
• Rationalise the 30-35 per cent taxation on the industry;
• Formulate specific valuation rules to allow deduction of land value from transaction value and clarification on whether developer or contractor gets credit under the GST regime.

AFTER
Affordable housing being given infrastructure status is a welcome move and will help in the ´Housing for all´ by 2022 Mission – it is a big and positive move for developers, banks and housing finance companies.

Special funds under the Pradhan Mantri Awas Yojana (PMAY) and refinancing by NHB will help more developers to enter the sector and will boost affordable housing for a large number of home buyers.

The one-year rental tax relaxation for new properties with occupancy certificates will help developers use the year to sell off the stock which can be held as stock-in-trade. The taxation on vacant residential property is likely to bring down the number of vacant housing units across the country by unlocking them for rental housing.

The Budget fine print indicates the biggest tax arbitrage via setting off loss from second homes has now gone away. However, the effect of this is not so positive for the individual buyer. Earlier, an individual could buy a second home on mortgage and show a loss via differential between interest paid on mortgage minus rent received from the property. The loss could be adjusted against income from salary or other income. Now the adjustment has been restricted to Rs 2 lakh only, which is miniscule for individuals with high income. The provision is negative for the real estate sector as it may discourage investment in second property to save tax, especially by the salaried class.

The government´s focus on developing multimodal infrastructure including rail, roads, ports, airports and waterways will help to decongest urban areas and the development of new industrial cities around industrial corridors.

The new affordable housing area criteria based on carpet area instead of built-up area will give buyers the benefit of larger units within the same 30 and 60 sq m units.