The measures announced by the Union Finance Minister Nirmala Sitharaman Today in the Budget 2020 for the real estate industry has had mixed reactions from the industry. While some say that the efforts of the government will yield positive results for the industry in the times to come, others were not so hopeful. Here is a look at what they said:
Ramesh Nair, CEO & Country Head, JLL India
Extension of benefit u/s 80EEA to avail additional INR 150,000 interest deduction on home loans for first time home buyers will benefit first time home buyers. (currently available for home loans sanctioned between April 1, 2019 and March 31, 2020), has been extended until 31st March 2021. Considering that a majority of home buyers fall in the lower and mid-income segments, this tax benefit will boost demand substantially.
Shishir Baijal, Chairman & MD, Knight Frank India
The real estate industry was hoping that the government would come up with measures to boost housing demand. However, the removal of exemptions under the new income tax regime, implying no tax benefit on principal and interest for home loans would be a dampener for the sector. The extension of benefit for affordable housing for the developers as well as home buyers by one year is a step in the right direction. As far as the funding constraint for the real estate sector is concerned, the government spoke about enhancing the partial credit guarantee scheme for NBFCs, which again may not suffice for the ailing real estate sector.
Anuj Puri, Chairman, ANARCOK Property Consultants
The Budget misses on the ‘quick fixes’ the real estate sector needs urgently and focuses more on a long-term vision. Still, there were a few positives like affordable housing continues to be the government’s focal point for real estate. The previous tax exemptions for both homebuyers and developers have been extended for another one year.
Shubham Jain, Group Head & Senior Vice President, Corporate Ratings, ICRA Ltd.
The Union Budget 2020-21 continued the Government boost on the affordable housing sector by extending the permitted additional deduction of up to Rs. 1.5 lakhs for interest paid on loans borrowed for the purchase of an affordable house valued up to Rs. 45 lakhs by one year, i.e. – upto March 31, 2021. Thus, the total tax deduction available on such interest paid stays at Rs. 3.5 lakhs for one more year, which is expected to positively impact demand in the affordable housing segment. Moreover, segmental supply is also expected to be favourably impacted by the one-year extension in the tax holiday currently available to developers of affordable housing. Some positive impact is also expected on the warehousing segment, given the proposed announcement of a National Logistics Policy, availability of viability gap funding and overall focus on the creation of efficient warehousing.
Dhruv Agarwala, Group CEO, Housing.com, Makaan.com and Proptiger.com
In the 2020 budget the government has decided to help the common man by reducing the income tax burden on individuals. By doing this, the government will definitely help boost consumer sentiment which will give a big fillip to consumption. This was the need of the hour to boost a flagging economy. Supported by a low interest rate regime, these tax savings will also encourage buyers to invest in real estate, which has traditionally been the favorite asset class in India but has been struggling in the recent past. Considering that the Budget has also extended the additional Rs 1.5 lakh tax benefit on interest paid on affordable housing loans to March 2021, buyers have now have more reasons to invest in property.