Focus of Government is laid on affordable housing, liquidity and ease of local sourcing norms in Budget 2019

By : 360 Realtors

15 July, 2019

The Union Budget of 2019 has been presented. The sustained focus is laid on affordable housing by the Government, who aim to increase the demand. The government’s initiative of awarding the infrastructure status to the affordable housing segment has been successful in increasing the carpet area. Not only this, but it has also been able to redefine income definitions so that the supply in the market is boosted. Under Section 80-IBA of the Income Tax, 1961 to 30 March 2020, the 100 per cent tax holiday has already been extended.

The Government has taken the initiative of helping the buyers in the affordable and mid-housing segments by providing an additional exemption of Rs. 1.5 lakh (interest paid on housing loan) for properties up to Rs. 45 Lakh. Since the majority of homebuyers fall under the category of lower and mid-income segments, this particular tax benefit is supposed to boost demand substantially. Not only this, the first-time home buyers will also get these benefits from the interest subvention under the CLSS scheme and the announced tax benefits. The eligibility of mid-income housing segments will also improve on a higher scale.

For affordable housing and public infrastructure and to improve supply, land parcels of government and PSUs to be utilized has been proposed by the Budget 2019.

  • A model Tenancy Law has been proposed by the budget which shall be finalized and circulated to the states since the Archaic rental laws have been disadvantageous for the tenants as well as landlords.
  • The regulatory body will be unified to place both the NBFCs and HFCs under the purview of RBI which will be leading towards an improvement of transparency in the system.
  • It has also aimed towards addressing the NBFC liquidity issue. A one-time provision for a period of six months has been proposed to offer a partial guarantee to the public sector banks so that high-rated pooled assets of Rs. 1 Lakh crore can be bought from the NBFCs.
  • The local sourcing norms have been eased in single-brand retail. Thus, the segment will be more profitable as well as attractive for foreigners to invest and show interest. Budget 2019 has initiated on making the real estate sector of India to be more lucrative
  • Foreign portfolio investors have been allowed by the budget to subscribe to listed debt papers of REITs and InviTs. As a result of this, the investment option for foreign investors will be having more scope and also increase the flow of funds. The asset portfolio will also increase and REIT investments will become more profitable.
  • The development of TOD zones and their role played in the overall urban development has also been addressed by the budget. The commercial and industrial units will grow as a result of this.