Budget 2017- Decoded.
Highlights from the Union Budget 2017
The union budget is out and everybody is eyeing it for their benefit. Here are the highlights that make the budget interesting for each one of us:
- The government aims to focus on a digital economy and hence, promote online payments and ease the process. Under this plan, the government will target Rs 2,500 crore digital transactions across platforms like UPI, will launch 2 new schemes to promote BHIM app and an AadhaarPay app.
- In addition to the digital plans, Mr Jaitley also announced that no individual will be allowed to make cash transactions above Rs 3 lakh.
- NHB (National Housing Board) to refinance loans worth Rs 20,000 crore.
- The infrastructure sector was allocated Rs 3.96 lakh crore in the Union Budget 2017-18.
- The railway, transport & airways sector in total were allocated Rs 2.41 lakh crore. For highways, the allocation was raised to Rs 64,000 crore.
- Foreign Investment Promotion Board (FIPB) has been abolished and a new roadmap will be announced. Moreover, new FDI (Foreign Direct Investment) policy is also under consideration.
- Rs 10,000 crore for recapitalisation of banks.
- The total expenditure for the Union Budget 2017-18 will stand at Rs 21,47,000 crore.
- Fiscal deficit was pegged at 3.2 per cent of GDP.
- Capital gains regime for land and property holding period reduced from 3 to 2 years.
- Pace of demonetization has picked up; demonetization effects will not spill over to next year.
- Demonetization will help in transfer of resources from tax evaders to government.
- The effect of demonetization will not hamper any sector and cash will be sufficiently available in new currency.
What’s instore for Real Estate in 2017- in a nut shell
In the Union budget 2017-18 announced on Feb 1, Finance Minister Arun Jaitley has proposed granting of ‘infrastructure’ status of the affordable housing campaign.
Though the real estate sector had high expectations from the Union Budget, the budget was not as expected. The announcement of ‘infrastructure status’ to the affordable housing sector, can serve as a significant step in achieving the government’s ‘Housing for All’ mission that is set to be completed by 2022. Speaking on this Ssumit Berry, managing director, BDI Group said “It will help the sector to get the benefits of infrastructure sector, which was a long-time demand of the realty industry. The new measure will reduce costs for developers and attract more investors. It is a great push for the ‘Housing for All’ vision and will definitely benefit first-time buyers.”
Budget 2017’s focus on affordable housing
It is believed that it will have a positive impact on first-time home buyers.
- The tax rate has been reduced from 10% to 5% on individual income between Rs 2.5 lakhs and Rs 5 lakhs.
- Moreover the qualifying size for affordable housing has also now changed, from a built-up area to a carpet area of 30 sq metres and 60 sq metres for projects within the municipal limits of the large 4 cities and all other areas, respectively.
What the real estate sector expected from the budget
- ‘Single window clearance’ was demanded by the real estate sector which would facilitate smooth execution of projects. Developers have criticized the stiff bureaucratic control of the industry that results in delaying the constructions in unprecedented manner.
- Getting the project clearance is another major hurdle that’s faced by the real estate players. The sector demanded the government to issue clarity regarding the Pradhan Mantri Awas Yojana (PMAY). Under the scheme, government announced that an interest rate of only 4 per cent would be charged on loans above Rs 9 lakh and 3 per cent on amount above Rs 12 lakh. However, it is unclear whether those not falling under EWS (Economically Weaker Section) or the LIG (Low Income Group) segments would be the beneficiaries.
- The real estate sector contributes approximately 15 per cent of India’s GDP. There was a demand for allotting ‘industry status’ to this sector too. The builders and developers are forced to avail loans at higher rates of interest. Due to the heavy interest rate loans, the market players are compelled to face shortage of funds. The end result is delayed completion of projects, impacting the end consumer in adverse manner.
The union budget is mainly aimed at economic reformation of the poor and if speaking of the real estate sector, the budget was a mix of both good and bad for this sector.