With the 2018 budget to be announced soon, the year 2018 is full of expectations as the developers are keen to sell the homes to the homebuyers who are looking forward to buying homes. Many people will be helped by the tax benefits, while also fulfilling the ‘Housing for All’ objective of the government. Many people desire that the reduction in taxes and incentives will result in the rise of the real estate market.
Let’s see what are the expectations by the industry and buyers from this year’s budget:
Buyers are hoping:
1. Cheaper Home Loans: Banks already offer a low interest rate but the buyers hope for more. To increase the buying the rate of interest on housing loans needs a further cut. The credit-linked subsidy scheme (CLSS) under the PMAY (U) has notably helped the middle-class group. “Benefits section 80C for home loan repayments should be increased from Rs 1.5 to 5 lakh. Incentives and lower interest rates reduce the burden of EMIs on the salaried class and gives them the confidence to buy a house,” notes Nikhil Kain, a homebuyer in Delhi.
2. Exemption and Incentives: An increase in incentives for the first time homebuyers is expected by the buyers under section 80EE by way of increasing the limit to Rs 2 lakh from Rs 50,000. Young homebuyers who desire to own a home but aren’t able to do so because of the budget problems can be hopefully aided by this.
3. Reduction in tax slab: A raise in personal income tax limit is expected from 2018 Budget as the lower-income group falls in this category. In the affordable house segment, it is one of the most significant categories so the tax benefits will hopefully be helpful for homebuyers in this segment. In this budget, the tax exemption is expected to be raised to Rs 3 lakh from 2.5 lakh.
Developers hope for:
1. Industry Status for the Real Estate Sector: “The Real Estate Sector should be allotted ‘Infrastructure’ status. This will lead to construction funds being available to the developer at much lower interest rates. This is eventually going to benefit customers from the Economically Weaker Section (EWS) and Lower Income Group (LIG) as developers would be in a position of making the projects ‘affordable’ in its true sense,” notes the Managing Director of Poddar Housing and Development Ltd, Rohit Poddar.
2. Infrastructure Status to the Housing Sector: Giving Infrastructure status to the Housing Sector is expected to simplify the approval process for affordable projects, create guidelines and increase transparency. It could also attract debt and pension funds to invest in the affordable housing segment.
3. Single window clearance: The approval process is one of the main reasons for the delay in projects. A single window clearance will not only help developers kick off their projects at the earliest but buyers are also likely to get possession without any delay.
The Industry has been demanding this for a while. “The biggest delays in delivery of houses occur due to delay in approvals of projects and authorities have a major role to play in this. An online single window clearance with bare minimum human interface and precise deadlines for approvals will not only bring down the deliveries of the project by at least three years but also reduce the cost of the project by at least 15% which can further be passed on to the consumers. Going online will also boost transparency,” says the Director of ABA Corp and Vice President of CREDAI Western UP, Amit Modi.
The budget this year is expected to be different as now the tax rates for goods and services are decided by the GST Council. But to boost the real estate industry, the developers and buyers are hoping for tax relief and incentives.