Budget to boost housing sector; builders need to improve their image: PM Modi

Prime Minister Narendra Modi hard-sold his government’s budget 2019 announcements, saying they will give a fillip to the real estate sector, which now has to work to improve its credibility with the masses..

Addressing a real estate conference organised by CREDAI, prime minister Narendra Modi on February 13, 2019, said the government was constructing homes under the Pradhan Mantri Awas Yojana (PMAY) at a rapid pace, to fulfil its ambitious target of providing ‘Housing for All by 2022’. Modi highlighted the steps taken by his government in the last four-and-a-half years, to boost the real estate sector. He said the new Real Estate (Regulation and Development) Act (RERA) and the benami property legislation, have helped in bridging the trust deficit between builders and consumers. The sector has also progressed on the ease of doing business and construction permits are being given at a fast pace, he said.

Talking about tax incentives for the housing sector announced in the interim budget 2019, the prime minister said that these sops would benefit both, the developers and home buyers. The move to exempt people earning up to Rs five lakhs from payment of income tax, will benefit the housing sector as the surplus will find its way into real estate, he said. “Youth will be encouraged to buy house with this exemption,” Modi said. In a lighter vein, Modi said that the prime minister himself has to explain the benefits of the budget provisions to developers, as they are still stuck on GST issues. He also listed out other incentives, such as increase in the tax deducted at source (TDS) threshold for rental income, from Rs 1,80,000 to Rs 2,40,000.

To boost the purchase of second homes, Modi said the government has announced that capital gains of up to Rs two crores could be rolled over for investment in two housing units, from the current one unit only. It also exempted tax on notional rent on a second self-occupied house. Similarly, Modi said, the period of exemption for levy of tax on notional rent on unsold inventories, had also been extended from one to two years. For boosting affordable housing, the prime minister said the 100 per cent deduction of profit under Section 80-IBA of the Income Tax Act, was being extended for one more year, to housing projects approved till March 2020.

He said the Goods and Services Tax (GST) on the sector had been reduced to eight per cent for affordable housing and 12 per cent for other under-construction homes. The GST rate on various construction material has also been brought down to 18 per cent from 28 per cent.

The prime minister asked developers to target the ‘neo middle-class’, as a large number of people are coming out of poverty. “Now is the time, the target should be on neo middle-class category,” he asserted. Expressing concern over the image of the sector, Modi asked developers to improve their credibility that has been affected, because of defaults by some builders. He also urged them to adopt new technologies for faster construction. “Real estate sector plays a catalytic role in providing employment. Do you get enough respect? Who is responsible?” he said and asked developers to focus on improving their image.

The prime minister said 1.5 crore houses for the poor had been built at twice the speed, to realise the target of Housing for All by 2022. He said there was no corruption in identifying the beneficiaries under the PMAY. “By 2022, all homeless will get a house,” he added. Modi said the central government has been trying to bring a positive change in the real estate sector, adding that demonetisation was one such measure, aimed at curbing the use of black money in the sector.

[Courtesy:Housing.Com]