Over the past two years, India’s real estate sector has witnessed a slew of policies and reforms being announced and implemented. The primary aim of these was to promote growth and increase transparency to improve the overall economic growth of the country.
During the year 2017, the successful roll-out of focused reforms including the establishment of a real estate regulator (RERA), implementation of India’s biggest Tax reform, the Goods and Services Tax (GST), relaxations in the annual budget for affordable housing projects, incentives under the PMAY (Pradhan Mantri Awas Yojna) scheme and further relaxations in carpet area for affordable housing units have provided a much-needed thrust to India’s housing market. The results of these various reforms are already being felt across the country’s economic landscape. Among the 190 countries surveyed in World Bank’s Doing Business 2018 report, India saw an improvement in its ranking from 130 in 2017 to 100 in 2018.
Key aspects from the Union Budget 2018 that will Assist Mumbai Home Buyers
To facilitate an increase in activity across the housing market, the central government leads the way and rationalizes stamp duties for union territories. The Centre should also nudge individual states to make the process of property tax assessment and collection simpler. This would go a long way in improving end-user sentiment and encourage investments in the segment.
Under Section 54 of the Income Tax Act, capital gain benefits are made available to buyers, who sell their property and acquire a new one, within a stipulated period of time. However, if the possession is not provided on time, there is a penalty on the developer under the RERA, but no benefit to the buyer who still has to pay the heavy tax. With the government already looking forward to the 2019 general elections, there may also be some marginal relief given to the middle class. Finding a balance between farm growth and infrastructure growth, would more likely be the key focus of the government, a year before the elections.