Most of the home buyers budget their monthly instalment on home loan to secure their financial future. Interim budget 2019 was perfectly placed to be announced just before general elections, so it had to please the lower and middle class segments of the society, which constitute the majority of Indian population. Budget 2019-20 has proven somewhat beneficial for home buyers and real estate developers in several aspects. Budget always has something to offer to every citizen, irrespective of their choices and preferences.
The undoubted fact is that the housing interest rates have approached the double-digit numbers since the last decade. Most of the metropolitan cities have become densely populated and are ranked among top ten most populated cities in the world making housing sector one of the most talked and debatable subject. The rise to migrate to bigger cities, concept of nuclear families and rural urbanization are the main reasons for the sudden rise in the housing demand.
As we know that large segment of society does not own their home they live, so to enable them to purchase a house, Government announced budget 2019 for their benefit. Further let's discuss important budget announcements made by our Finance Minister related to housing sector:
Earlier GST was implemented at the rate of 18% on under construction properties, further it was reduced to mere 5% which would eventually lead to high incentive and help in the generation of more housing demand in the real estate sector.
Income Tax rebate for Salaried
Middle class segment of society which plans to buy homes in near future expects government to lower the home loan interest rates, reduction in the income tax slabs, lesser processing fee, lower balance transfer charges, increase in the tax deduction limit under 80C, and much more. However, with the announced tax rebate for the income up to Rs. 5 lakh will definitely uplift these income segment families in availing housing finance. Salaried people with annual gross income up to Rs. 6.5 lakh may not pay tax, if they start investing in mutual and provident funds. As per the finance minister, approximately three crore middle-class taxpayers, such as self-employed, pensioners, small traders, salary earners and senior citizens will be benefited from this interim budget.
Under section 80-IBA of the Income Tax affordable housing has been extended for one more year. Under this section, the income of developers building affordable housing projects was made tax free.
Union Budget's Unaddressed Concerns
Union Budget covered almost every citizen in providing them some benefits, however there were some relevant issues which remained untouched throughout the budget announcement. Few of them are as follows:
Amid the announcements of interim budget, NBFCs issues were not addressed which made the real estate sector dejected. With the union budget not every home buyers or stakeholders are convinced. No concern was shown towards the pending housing projects. Home buyers are finding it difficult to gain the possession of their house because of lack of funding with real estate developers or builders. Due to which several under construction projects are yet to be competed and the victims are home buyers or investors. Government introduced various affordable housing reform schemes, such as Pradhan Mantri Awas Yojana (PMAY), Credit Linked Subsidy Scheme (CLSS), Real Estate Regulatory Authority (RERA) but still there is a shortage of Rs. 2 crore housing units nationwide. As per the property consultants, there are approximately 6-7 lakh unsold units with developers with projects in eight major cities.
Expectations of home buyers from budget 2019
Reliefs or rebates offered by the interim budget 2019-20 were probably not welcomed by its audience as the concerns which were comparatively important were not discussed. The reliefs related to real estate sector primarily focused on the minimal increase or reduction of limits, TDS, tax, rent, etc. No major change was introduced that could have benefited the homebuyers or developers. Several important concerns were only proposed or recommended but not implemented. Therefore, real estate sector will have to wait for another financial year to welcome next union budget to witness new set of benefits for homebuyers, investors, builders, and developers.