Real estate in India is also depends on another field and evaluates to grow GDP will absolutely be motivators to real estate. The expectation of the real estate from the Budget 2016 are availability of cheap funds and financial protection for home buyers by increasing the perimeters.
What the Budget 2016 does?
• 100% deduction for profits to an undertaking from a housing project for flats upto 30 sq. metres in four metro cities and 60 sq. 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.
• ‘First - home buyers’, will be given a 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.
• Any distribution made out of income of SPV to the REITs and INVITs having specified shareholding will not be subjected to Dividend Distribution Tax.
Impact on sector
• Additional interest deduction of Rs 50,000 per annum would result in an increase in demand from first-time home buyers who constitute around 40-50% of the demand.
• Clarity on taxability of REIT distributions, could lead to some exchange-traded REITs in FY17 and beyond
Indian real estate is facing many up & downs from the last 5 -6 years and the expectations from this budget of Central Government were so high to give some power booster which will ignite the real estate engine. But the policy for real estate by this budget is not sufficient.
Delay in different types of approvals is the main hurdles of the real estate industry with demand of single window approvals. Actually real estate was expected to reduce the time and cost of all these approvals. In spite of this, an additional 0.5% tax of Krishi Kalyan is liable on real estate would cause extra load on home buyers who are already troubled with increases in local stamp duties and circle etc.
Real Estate Regulatory Bill and Its Impact!
Real Estate Bill, 2016 is passed by the Cabinet Ministry that gives power to investors & end users, in making a knowledgeable choice about buying homes, on time delivery, and offers wide options for legal recourse in case a builder fails to deliver what they promise.
From the long time real estate investors are completely depending on the mercy of dishonest developers. Now this bill setting up a top body to control all realty movements in India. Here we describe how this bill will give you the benefits.
Excellent Transparency
There are so many sad stories of investors like people book a flat in pre-launch period with attractive discount but after some time they find out that some necessary approvals are missing. Now with this bill, Real Estate Developers cannot launch their projects without the necessary approvals from the authorities. Builders will have to release approval papers with the layout and master plan and possession date, and the agreement paper with contractors, architects, structural engineers etc. in front of the customers.
Timely Possession
The main reason behind the project delay is the forwarding of funds to other developments. Now builders will have to collect 70% of the development funds in its dedicated bank account in the beginning, which can only be used for the assigned development. This would make sure well-timed construction and act as a safeguard in the event of any excessive delays.
Insurance of land titles
The bill provides insurance of land title, which reimbursement both the investors and builders in case land titles are later found to be imperfect.
Know what you are paying for
Now builders will have to charge for ‘Carpet Area’ in place of ‘Super Built up Area’. Previously builder was misused these terms to take additional charges for common areas.
Get what you are promised
The real estate developer always advertises about eye catching design, greenery and many world class amenities, but in the end final product is very much far away from this. Now the builder has to return the money with interest to the investors who are misled in any form. As well, in the middle of development builder will not allow to make any alteration in the master plan, floor plan etc. without the on paper permission of no less than two-third of the investors. In case of any insufficiency observed after the possession, the end users can claim the builder within a year.
Relief for current investors also
If previous investors facing any upper mentioned problem, can also claim under Real Estate Regulatory Bill.
Real Estate Appellate Tribunals
The Bill creates state level tribunals called Real Estate Appellate Tribunals. Every decision of can be petitioned in these courts.
