Budget 2015: Mixed bag for the realty sector

Realty players expected a lot from the Union Budget 2015. In the end, the Budget can be summed up as a mixed bag for the sector. Though there are no direct benefits, a thrust on sustainable growth and infrastructure will benefit the sector in the future. Let us see the announcements that will aid the sector.

End of speculation to GST

In his Budget, Finance Minister Arun Jaitley announced that GST would be implemented from the next financial year. GST will benefit real estate developers as well as buyers. By announcing implementation of GST, the Finance Minister has put to rest all speculations regarding it.

Faster approvals

In his Budget, the Finance Minister announced setting up of an expert committee that will aid in the making of a pre-existing regulatory mechanism to quicken approvals. This is a welcome move since real estate companies have suffered because of delayed approvals that pushed up project costs.

Relief to the Indian middle-class

By abolishing wealth tax, the Government has provided a big relief to the Indian middle class. Instead, the Government has introduced a surcharge of 2% on people earning Rs 1 crore or above. Abolition of wealth tax means that a majority of Indians will not have to pay any tax on property ownership and only super luxury apartments will be taxed.

Tax soaps to Real Estate Investment Trusts (REITs)

Tax soaps announced for real estate investment trusts will attract massive funds. Rationalization of capital gain tax regime for REITs is a big boost to the sector.

However, the increase of service tax from 12% to 14% has not gone down well with real estate builders, as it will aid inflation. It will also increase the cost of construction. However, the results of the announcements are still to be seen and one hopes that the sector will gain strength in the coming days.

GST Regime: A positive development for the real estate sector

The Indian real estate industry has witnessed a robust growth in tier I, II and III cities. Development in Goods and Services Tax (GST) is a positive development for the realty industry that can have a significant impact. At present, though construction services have been taxable under service tax and VAT, a few basic issues need to be solved. The proposed shift to GST will strengthen the realty sector and solve many of its problems.

As of now with service tax and VAT being the primary levies, there is a constant dispute on the rate of tax since there are several options for discharging taxes across the states. Because of this, real estate developers have been following diverse practices. However, with GST being implemented the practices would be common across geographies. This will benefit real estate companies in bangalore as well as buyers.

Benefit to buyers

Presently, homebuyers need to pay VAT and service tax while booking an apartment before its completion. The developer on the other hand needs to pay CST, excise duty, customs duty, etc. all of which is added during pricing. All these taxes push up the cost of the residential unit to a great extent. GST aims to remove all these taxation system with a single system. Thus, it will bring down the cost of construction and aid buyers.

Benefit to commercial developers

Commercial developers will benefit immensely from the regime as most of them are burdened with high costs since there is no credit is available for construction services on a commercial property. Hence, most of them are rented out. GST will ensure a smooth flow of credit, thereby aiding developers.

Overall GST augurs well for the real estate industry. Smooth flow of credit will increase investment opportunities in india property bangalore and real estate builders can expect more transparency in the sector.

Reasons to invest in eco-friendly properties

With time, there has been a growing buzz for eco-friendly homes. Real estate developers, as well as buyers, are focusing on green aspects during construction. Given below are the reasons as to why you should invest in green homes.

Increases your home’s value

Green homes use sustainable construction materials that boost the overall value of the house. These materials have lower utility bills and are better for the environment. Prices of such apartments are on a rise and will fetch good returns in the coming days.

Lowers utility bills

Green apartments help save a lot of money. You can save on your electricity and other bills. Since these homes have strong insulation, there is no need for artificial heating and cooling system. This reduces the load on your finances.

More durable

Eco-friendly homes wear out soon as they are constructed from recycled products is a common misconception. However, it is not the case. Recycled plastic and wood fibers are more durable than traditional materials. You will spend less time and money in maintaining your home.

Healthy living

Eco-friendly houses improve bio-diversity and the quality of indoor air. This helps you lead a healthy life. Because of cross-ventilation in green apartments, there is free movement of the air that helps residents lead a healthy life.

Preserve the surrounding

Eco-friendly homes preserve the surroundings and cut down carbon emissions. Since they use natural resources, the impact on the environment is extremely less. Real Estate Builders companies engaged in building green apartments can also avail various tax benefits.

Less expensive

It is a common belief that these homes are expensive. Nevertheless, it is not. Since these apartments help you save so much that your cost is recovered soon.

With the degradation of the environment, green homes are the need of the hour. Property investors are increasingly investing in such properties. In the coming days, the demand for these homes will further rise.