Union budget 2016 has focused on some key issues which is positive for real estate sector. In some major declarations made in the budget regarding affordable housing, it is clear that government is keen to give a boost to affordable housing segment, being also in lined with government’s initiative to provide housing to all by 2022. 100% Service tax exemption has been given to make houses up to 30 sq mtr in 4 metros and up to 60 sq mtr in others. We believe that his policy for affordable segment will benefit the home buyers, especially the middle and lower income group. Increased tax rebate to 60000 will benefit those living in rented houses in a big way. Certain issues related to direct and indirect taxes have been addressed which is good.

Though the budget has brought some relief to the housing sector; however, overall expectations of the realty sector were high which have not been met. In a move to boost the housing demand, deduction of Rs 50,000 has been given on a loan of up to 35 lakhs. There has been allocation of funds for infrastructure development which includes construction of road networks and setting up of 300 urban clusters. Affordable housing has been given a fair share. This would kick start the real estate in Tier 1 and Tier 2 cities along with new mushrooming areas in major cities as well. Direct Dividend Tax (DDT) is now exempt from REITS. This was very much required to make REITS efficiently functional.But much to our disappointment, Industry status and single window clearance system could have been the biggest game changing reforms for real estate sector which were not even mentioned in the budget

.The real estate sector has been going through tough times for now four consecutive years and the expectations from the third budget of the new government were extremely high to inject that dose which will spur growth in the sector and use real estate as another additional vehicle to grow the economy. The budget however left the industry gasping for more.

There were no announcements in granting of infrastructure status to the industry which will allow it to access low cost funds with reduced collaterals from FDI, ECB’s as well as domestic banks. Approval time is the biggest bottleneck of the industry with demand for a single window clearance having been a unanimous voice for many years now. What the industry was expecting were measures to reduce time and cost involved in getting permissions. In fact, the addition of 0.5% Krishi Kalyan Cess on all services would cause additional burden on home buyers who are already burdened with increase in local stamp duties and sector rate increases in addition to cost escalation.

It so appears that the government is committed to 3 key initiatives around Housing for All, 100 Smart Cities and Affordable housing which together will boost real estate. This budget has tied up key initiatives announced in the last two years. We are sure, we can look forward to many of our “Ye Dil Maange More” coming around in various forms and measures during the year with the 2 crucial bills of GST and Real Estate Regulatory Bill getting passed soon to drive the real estate sector out of the current situation sooner than later.