Budget 2019: What to Expect for the Real Estate Paradigm in Palakkad
The Union Budget 2019 reform measures have helped boost a lot of sectors in the Indian economy including rental. If you’re thinking of buying or renting property being aware of the government’s latest policies will help you immensely with your decisions. You should know what to expect for the real estate paradigm in Palakkad if you’re planning on taking a rental in the beautiful city.
We all know how rental, affordable housing hit a boost in Budget 2019. With the advent of GST and pro-development policies like affordable housing, the face of the Indian real estate sector is changing. While the sector is still adjusting to these developments, it is expected to benefit all stakeholders in the long run.
The public sector banks are the major source of financial assistance to the industrial sector. They extend credit support to the firms in the form of loans, advances, discounting bills, project financing, term loans, export finance, etc.
There are joint development and concession mechanisms to be used for public infrastructure and affordable housing on land parcels held by the Central Government and CPSEs.
- Support for affordable housing projects:
The government has been consistent with its efforts in addressing affordable housing. Be it giving infrastructure status to this segment in the previous budget, to helping increase the quantum of beneficiaries in Credit Linked Subsidy Scheme (CLSS) under Pradhan Mantri Awas Yojana (PMAY) by expanding the carpet area and re-defining income definitions.
For the realisation of the goal of ‘Housing for All’ and affordable housing, a tax holiday was provided on the profits earned by developers of affordable housing. The government in Budget 2019 announced to continue its expansive movement for affordable housing projects. The Finance Minister proposed that under the Pradhan MantriAvaasYojna(PMAY), 1.95 crore houses will be constructed from the year 2020-2022. These houses will include amenities like LPG, electricity and toilets.
The government has also provided further incentives to drive affordable housing. It has proposed interest deduction up to Rs 3.5 lakhs for affordable housing priced below Rs 45 lakhs as against Rs 2 lakhs earlier for loans availed until March 31, 2020. This can help attract first-time homebuyers, besides stimulating demand for low-cost housing. It accounts for an overall benefit of around Rs. 7 lakhs over a loan period of 15 years.
The move is likely to help streamline, boost the highly unorganised Indian rental market which is estimated to be around $20 billion as per Indian Monetary Fund. Finance Minister, Nirmala Sitharaman has also proposed that several land parcels held by Central govt. , PSUs would be used to build large public infrastructure, affordable housing.
- Cross purchasing of commercial and residential property from sales proceeds
If sale proceeds are reinvested under Sec 54 in which capital gain from a previous property was rolled over, you can’t sell it first for three years. According to Section 54F of the Income-Tax Act, you can save capital gains tax on the sale of a commercial property by purchasing a residential property within a year before or within two years after the date of sale of the property. Please note that the new house must not be sold before three years from its purchase, else you will lose your tax benefits.
- The PMKVY scheme
India is one of the youngest nations in the world with more than 62% of its population in the working-age group (15 – 59 years), and around 54%, below 25 years of age. To take advantage of this demographic dividend, India needs to equip its workforce with employable skills and knowledge so that they can contribute to the economic growth of the country.
Pradhan Mantri Kaushal Vikas Yojana (PMKVY) is the flagship scheme of the Ministry of Skill Development & Entrepreneurship (MSDE). The objective of this Skill Certification Scheme is to enable a large number of Indian youth to take up industry-relevant skill training that will help them in securing a better livelihood. Individuals with prior learning experience or skills will also be assessed and certified under Recognition of Prior Learning (RPL). Under this Scheme, Training and Assessment fees are completely paid by the Government.
The PMKVY scheme aims to encourage aptitude towards employable skills. It also aims to increase the working efficiency of probable and existing daily wage earners, by giving monetary awards and rewards and by providing quality training to them.
- Industry Status for the Real Estate Sector
It’s time the real estate sector gets industry status. This will enable developers to raise funds at lower rates and reduce their cost of capital, which will eventually have a bearing on overall project cost.
This opinion seems almost unanimous in the industry. From a financial aspect, industry status will imply that the provisioning norms for lending will change. The limits set for banks to lend to the sector will increase. This implies there will be more funds at cheaper rates and an increased fund supply for the construction business.
It would enable developers to cut capital costs and pass on the benefits to consumers. The government should speed up its measures for infrastructure development which will ensure cheaper land for housing and push affordability.
The first and foremost demand is announcing the “industry status” for the real estate sector. Everybody witnessed the impact of granting the infrastructure status to affordable housing. This segment of the housing is clearly on a significant growth path and this could be achieved for the entire real estate, with the above move. This will not only improve the credit availability for the companies operating in the sector but will also boost the overall sector image.
- Single Window clearance for real estate projects
Another big support required is towards the GST, there is a significant need to rationalise the impact of GST for real estate to make to more attractive and affordable. While the government has been showing signs of considering the proposal, however, nothing has finally been approved.
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