Union Budget 2016 had a very lukewarm response from real estate sector, especially for home buyers. It has given a hope for the indirect benefits which can be seen for some long term. This union budget has not turned out that everyone was hoping but have laid a path for infrastructure development.
All the home buyers and developer are disappointed in the budget as they have hoped more from a business and investment point of view. Budget have also focused largely on agriculture and infrastructure. The Central government is focusing on affordable housing.
It has been announced that it is expected from the builders and developers that they will concentrate on building affordable homes.Here are some changes that took place for real estate sector:-
- There is an increase in additional tax. The rate of service tax on real estate services will increase by 0.5% from 1st of June 2016.
- Government have announced two rates of abatement which is for the construction of buildings, complexes and civil structures. One is that 75% of the amount will be charged for residential units which will be having carpet area below 2000 sqft with cost below 1 crore. Another is 70% of the amount will be charged in any case other than above. These call changes are in effect from 1st of March 2016.
- The budget announced that any service offered by way of construction, erection, etc of the civil structure under HFA (Housing for all) Urban mission/ PMAY (Pradhan Mantri Awas Yojana) are exempted from the service tax. There are only who are pertaining to (a) In-site rehabilitation of existing slum, dwellers using land as a resource through private participation. (b) Beneficiary-led individual house enhancement or construction. (c) Affordable housing in partnership with PMAY or any housing scheme of State Government.
- The Ready Mix Concrete which is [3824 50 10] which is manufactured at the construction site for use in construction work. These types of sites are fully exempted from excise duty.
- Income tax benefits are for undertaking developing affordable housing projects.
- 100% deductions for profits in a housing project for flats in the metro city of about 30 sq meters and of 60 sq. metres in other cities which are approved from June 2016 till March 2019 and have to be complete in these three years of time.
- Deduction for additional interest of Rs. 50,000 per annum for loans up to Rs. 35 lakh which should be sanctioned in 2016-17 for first-time buyers, but the house cost should not exceed from Rs 50 lakhs.
At last, the budget has provided Service Tax exemption to affordable housing schemes and additional assistance has been given to the first time home buyers. Also provided Income Tax benefit to the entities engaged in constructing affordable housing.