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.