How Favourable is Budget 2017 for Home Buyers?
May 24, 2017 Real Estate News
Here is a quick look at the main aspects of Budget 2017 from the perspective of an interested home buyer.
More supply will enter the housing market now, under the latest provisions because:
All these points make Budget 2017 quite favourable for affordable home buyers.
- Budget 2017 is neither offering additional income tax incentives to first-time home buyers nor is it providing higher tax savings on housing loans and house insurance premiums. The budget is also not raising house rent deduction limits.
- But on the flip side, it did provide some direct tax relaxation to the lowest income earners.
- It also gave some clarity on the designated beneficiaries under the Pradhan Mantri Awas Yojana.
- For the middle-income group, a new Credit Linked Subsidy Scheme (CLSS) with a provision of Rs 1,000crore has been introduced in budget 2017-18.
- The tenure of loans under the CLSS of Pradhan Mantri Awas Yojana (PMAY) has also been extended to 20 years from the existing 15 years.
- There is some good news for the rural India because:
- The government has also mentioned allotment of funds to build one crore houses by 2019 in rural India for the homeless and those living in ‘kaccha’ houses.
- Allocation to PMAY has been increased from Rs. 15,000 crore to Rs. 23,000 crore in the rural areas.
- Now onwards, affordable housing will be given infrastructure status. This announcement is of great importance because it will provide the vital budget housing segment with cheaper sources of finance including, but not restricted to, ECBs (external commercial borrowings). Not only that, re-financing of housing loans by NHBs (National Housing Bank) can give a leg up to the sector.
More supply will enter the housing market now, under the latest provisions because:
- The developers will get one year’s time to pay tax on notional rental income on completed unsold residential inventory.
- The long term capital gains have also been reduced to 2 years from the earlier 3 years.
- Previously, affordable housings were recognised on the basis of saleable area, but now it would be considered in terms of carpet area which should be of 30 sq. m. and 60 sq. m. The 30 sq. m. the limit will only be applicable within the corporation limits of the 4 major metros. However, for the fringe areas, it will be 60 sq. m. on carpet area. This will help the number of projects falling under this segment increase many folds.
- The following announcements will be immensely benefiting for the promoters of affordable housing projects:
- The promoters need not have to mandatorily complete their projects within the time frame of 3 years.
- There is good news for the land owners and property buyers. JDs liability to pay capital gains tax will be in a year after the project is constructed. This will further aid to the easing of land prices.
All these points make Budget 2017 quite favourable for affordable home buyers.
