Photo: Hrishikesh Bhatt
Never before any Budget had so sharply focused on the need for shelter for millions of homeless people spread over both urban and rural arena as has been the case this time. Steps announced by Arun Jaitley may well set housing sector on the road to revival and bring relief for those without shelter
The Union Budget 2016-17 is, indeed, going to be a budget for millions of homeless people. In all Five Year Plans and in all Union Budgets, Housing and Real Estate was neglected sector. This time Finance Minister Arun Jaitley has created a scope for expansion and moved a step closer to achieve the target of Housing for All by 2022. The vision of Prime Minister Narendra Modi to address Urban Poor and Rural Homeless people and those below the poverty line or BPL to get home by 2022 is been reflected in the Budget.
Some of the provisions of the Budget which will directly affect the Real Estate and Housing in the country are:
Steps to boost affordable housing
Pradhan Mantri Awas Yojna embodies the assurance of the Government to address the housing needs of all and more specifically those of the poor, in a time bound manner.
Construction of houses creates considerable employment opportunities as well. In order to fuel activity in the housing sector, FM propose to give 100 percent deduction for profits to an undertaking from a housing project for flats upto 30 square metres in four metro cities and 60 square metres in other cities, approved during June 2016 to March 2019, and is completed within three years of the approval. Minimum Alternate Tax will, however, apply to these undertakings.
“For the ‘first time home buyers’, I propose to give deduction for additional interest of Rs 50,000 per annum for loans up to Rs 35 lakh sanctioned during the next financial year, provided the value of the house does not exceed Rs 50 lakh,” said Jaitley in his Budget speech.
And he went on to say, “another proposal to stimulate housing activity is to facilitate investments in Real Estate Investment Trusts (or REITs). I propose that any distribution made out of income of SPV (or Special Purpose Vehicle) to the REITs and INVITs (or Infrastructure Investment Trusts) having specified shareholding will not be subjected to Dividend Distribution Tax. It is proposed to exempt service tax on construction of affordable houses up to 60 square meters under any scheme of the Central or State Government including PPP Schemes.”
FM also proposed to extend excise duty exemption, presently available to Concrete Mix manufactured at site for use in construction work at such site to Ready Mix Concrete.
Section 35AD of the Income-tax Act
Investment linked deduction for specified business. It is proposed to amend section 35AD of the Income-tax Act so as to reduce the deduction from 150 percent to 100 percent in the case of a cold chain facility, warehousing facility for storage of agricultural produce, an affordable housing project, production of fertilizer and building and operating hospitals with effect from April 1st, 2017. Warehousing provisions are being simplified so as to move from physical control to record based control in most of the cases. Several other consequential changes are also being made.
This move is to check the growth of e-commerce websites which are using logistics advantages over retailers to warehouse the goods.
Service Tax on services in respect of -- (i) construction services under Housing For All (HFA) (Urban) Mission/Pradhan Mantri Awas Yojana (PMAY); (ii) construction projects under “affordable housing in partnership” component of PMAY, subject to carpet area of dwelling units of such projects not exceeding 60 square metres; (iii) low cost houses up to a carpet area of 60 square metres per house in a housing project under any housing scheme of the State Government are being exempted, with effect from March 1st, 2016 from current 5.6 percent to nil.
Modernisation of land records is critical for dispute free titles. The National Land Record Modernisation Programme has been revamped under the Digital India Initiative and will be implemented as a Central sector scheme with effect from April 1st, 2016. The revamped programme will build an integrated land information management system. No less than Rs 150 crore has been provided for this.
Safeguarding PPP model
A Public Utility (Resolution of Disputes) Bill will be introduced during 2016-17 to streamline institutional 16 arrangements for resolution of disputes in infrastructure related construction contracts, PPP and public utility contracts.
Asset Reconstruction Companies (ARCs)
The 100 percent FDI in Asset Reconstruction Companies (ARCs) will be permitted through automatic route. Foreign Portfolio Investors (FPIs) will be allowed upto 100 percent of each tranche in securities receipts issued by ARCs subject to sectoral caps.
Courtesy Accommodation Times Research Bureau