Shweta Dixit – Page 35 – FindMyProperty

Bank should extend the benefit of lower interest rates beyond the retail sector, indicating that investors should cut the cost of loans for companies. Banks had benefited from RBI’s reduction in policy rates as well as the inflow of low-cost deposits in current and savings accounts in November and December. The average lending rate reduction (by banks) has been less.

As sustained by RBI, as well as the government, banks have pocketed the gains of the rate reduction and only in late December after a prod by the Centre the banks pared their benchmark rate by up to 90 basis points. But the reduction for home loans was lower and for other categories even lower.

The main focus of the bankers as they believed that lower rates could encourage demand was more on the retail segment, unlike the corporate sector which is besieged by a combination of excess production capacity and a high level of debt.

Union Finance Minister Arun Jaitley, who announced Union Budget 2017, has granted infrastructure status to affordable housing. This move is a good boost to real estate sector.

The announcement of affordable housing being given Infrastructure status is a welcome move and will act as a catalyst to meet the objectives of Housing to all by 2022. Credit off-take towards affordable segment of housing will lead to creation of supply especially for both stake holders the first home buyer and developer who will now have access to cheaper funding.

Finance Minister also announced that National Housing Bank will refinance individual loans worth Rs 20,000 crore in 2017-18. On the all-important front of personal income tax, the existing tax rate for incomes between Rs. 2.5 lakh to 5 lakh has been reduced to 5%, and taxpayers in other categories will also save Rs. 12,500.

Key highlights for real estate sector in Union Budget 2016-17:

• Pradhan Mantri Awas Yojana to get Rs 23,000 crore
• Affordable Housing has been given the Infrastructure status
• National Housing Bank to refinance Rs 20,000 crore loans
• No cash transaction above Rs 3 lakh will be allowed
• 1 crore rural houses will be created by 2019
• New FDI policy under consideration
• Rs 2.41 lakh crore has been allocated to boosting infrastructure for transportation
• Total allocation for the infrastructure sector is Rs 3,96,135 crore
• Allocation for National Highways to be at Rs 64,000 crore
• Indra Awas Yojana will be extended to 600 districts
• Holding period for capital gains tax for immovable property reduced from 3 years to 2 years
• Real estate developers to get tax relief on unsold stock as liability to pay capital gains will arise only in the year a project is completed
• Tax break of 1 year post receipt of the completion certificate, for the unsold stock
• Instead of Built up area of 30 and 60 sq meters, the carpet area of 30 and 60 sq meters will be applicable for affordable housing
• Indexation for capital gains shifted from 01-04-81 to 01-04-2001
• Window for availing 3 year profit-linked incentives for start-ups increased to 7 years against 5 years earlier

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