With Budget just a few days away for the Finance Minister Arun Jaitley to unwrap it on February 1, brokerage houses have a slew of expectations for the real estate from the Budget 2017-18 which is expected to lift realty sector out of the woods.
The real estate sector has been facing headwinds in recent years on account of inventory overhang in certain markets and subdued consumer sentiments.
Most brokerage houses expect the government to increase the tax deduction limit for housing loans, particularly for buyers in metropolitan cities.
“The Rs 2 lakh limit is insignificant for metropolitan home buyers, as the ticket size is over and above Rs 60 lakh. Also, tax concessions on house insurance premiums could be introduced to encourage end users to insure their homes,” said Angel Broking in its pre-Budget research note.
Salaried persons get house rent allowance or HRA as a component of their total salary, and can therefore claim a deduction. However, self-employed persons and those who draw lump sum without an HRA component can only claim a maximum deduction of Rs 2,000 a month under Section 80GG. Brokerage firms expect the upcoming Budget to address this anomaly.
Last year’s Budget made key announcements promoting low-cost housing and offering cheaper home loans to individuals who opted for an amount of up to Rs 35 lakh during the FY17.
“Low-cost housing benefits might be extended for the 2017-18 period. Additional tax breaks for those involved in the construction of such affordable housing are also expected,” stated a report from Angel broking on Budget expectations.
Brokerage firms said it will be beneficial for the real estate sector if government allows 10 percent increase in allocation to the implementation of ‘Housing for All’, 2022 scheme and other housing schemes, and also if some clarity on capital gains tax in the hands of Real Estate Investment Trust (REIT).
“For commercial real estate developers, further relaxation in certain taxation norms for REITs, such as capital gains on sale of asset, will be a favourable development. Developers will also be looking for clarity on the proposed rationalisation of corporate tax rates, which will enhance the yields from assets,” said ICRA in its pre-Budget note.