10 Policy Initiatives that Impacted the Real Estate Sector
May 15, 2017 Real Estate News
For one reason or the other, the real estate sector has been in news all the year round. Following are the 10 policy initiatives that posed as a game changer in the real estate market:
1)Real Estate (Regulation and Development) Act, 2016: The purpose of formulating this Act is to enhance transparency, bring greater accountability in the realty sector and set disclosure norms to protect the interest of all stakeholders. It is also aimed at speedy execution of property disputes will also be ensured in due course.
2) Amendment to the Benami Transactions Act: All the disputes arising from such transactions and levying penalties to increase the institution-investor participation will be under the purview of this Act. The main objective of this Act is to make India an attractive investment destination.
3) 100 percent deduction in profits for affordable housing construction: This scheme has been proposed by our finance minister to promote affordable housing. It is applied by flats of up to 30 sq metre in four metro cities and 60 sq metre in other cities.
4) Interest subsidy for first-time homebuyers: In order to encourage the first time buyers to purchase their own home, the Union Budget 2016-17 has proposed deduction of additional interest of Rs 50,000 per annum for first-time home buyers for loans of up to Rs 35 lakh sanctioned during the next financial year for houses with a value not exceeding Rs 50 lakh. This step taken by the government should stimulate home sales in non-metros in the long term where residential product prices are not as high as those in metros.
5) Change in arbitration norms for construction companies: With this change, the contractors can use this amount to complete projects or pay off debts. This will also improve the cash flow position of large developers who have significant exposure in infrastructure and government contracts and eventually help in the speedy execution of large infrastructure projects.
6) Service tax exemption on construction of affordable housing: Service Tax has been exempted for houses of up to 60 square metre under any scheme of the Central or state government including public private participation or PPP schemes. This will increase construction in the affordable segment and encourage greater collaboration between the public and private sector.
7) DDT exemption for SPVs to REITs: The Union Budget 2016-17 has clearly notified that no income from the Special Purpose Vehicles (SPVs) to the Real Estate Investment Trusts (REIT) and Infrastructure Investment Trusts (InvIT) would be levied under Dividend Distribution Tax. This has made REIT model financially viable for retail investors.
8) Implementation of Goods and Services Tax structure: Although the real estate industry is waiting for more clarity, nevertheless, (GST) is a positive move towards simplification of Indian tax system.
9) Currency demonetisation of 500 and 1,000 rupee notes: This move by the Prime Minister along with RERA will align the real estate sector to the international standards of doing business, resulting in more fund flow from institutional investors, banks, and higher unit sales.
10) Permanent Residency Status for foreign investors: PRS will allow the holders’ spouse/dependents to take up employment in India, as well as the purchase of one residential property for end-use. This will promote the asset class in a big way.
1)Real Estate (Regulation and Development) Act, 2016: The purpose of formulating this Act is to enhance transparency, bring greater accountability in the realty sector and set disclosure norms to protect the interest of all stakeholders. It is also aimed at speedy execution of property disputes will also be ensured in due course.
2) Amendment to the Benami Transactions Act: All the disputes arising from such transactions and levying penalties to increase the institution-investor participation will be under the purview of this Act. The main objective of this Act is to make India an attractive investment destination.
3) 100 percent deduction in profits for affordable housing construction: This scheme has been proposed by our finance minister to promote affordable housing. It is applied by flats of up to 30 sq metre in four metro cities and 60 sq metre in other cities.
4) Interest subsidy for first-time homebuyers: In order to encourage the first time buyers to purchase their own home, the Union Budget 2016-17 has proposed deduction of additional interest of Rs 50,000 per annum for first-time home buyers for loans of up to Rs 35 lakh sanctioned during the next financial year for houses with a value not exceeding Rs 50 lakh. This step taken by the government should stimulate home sales in non-metros in the long term where residential product prices are not as high as those in metros.
5) Change in arbitration norms for construction companies: With this change, the contractors can use this amount to complete projects or pay off debts. This will also improve the cash flow position of large developers who have significant exposure in infrastructure and government contracts and eventually help in the speedy execution of large infrastructure projects.
6) Service tax exemption on construction of affordable housing: Service Tax has been exempted for houses of up to 60 square metre under any scheme of the Central or state government including public private participation or PPP schemes. This will increase construction in the affordable segment and encourage greater collaboration between the public and private sector.
7) DDT exemption for SPVs to REITs: The Union Budget 2016-17 has clearly notified that no income from the Special Purpose Vehicles (SPVs) to the Real Estate Investment Trusts (REIT) and Infrastructure Investment Trusts (InvIT) would be levied under Dividend Distribution Tax. This has made REIT model financially viable for retail investors.
8) Implementation of Goods and Services Tax structure: Although the real estate industry is waiting for more clarity, nevertheless, (GST) is a positive move towards simplification of Indian tax system.
9) Currency demonetisation of 500 and 1,000 rupee notes: This move by the Prime Minister along with RERA will align the real estate sector to the international standards of doing business, resulting in more fund flow from institutional investors, banks, and higher unit sales.
10) Permanent Residency Status for foreign investors: PRS will allow the holders’ spouse/dependents to take up employment in India, as well as the purchase of one residential property for end-use. This will promote the asset class in a big way.
Looking for property portal?
Related Articles
-
Two Years of RERA: A Glance
May 22, 2019 -
-
Tips and Tricks to Save on Your Home Purchase
May 16, 2019 -
