Mumbai: The announcement of National Housing Bank (NHB) setting up a Urban Housing Fund, tax sops for first housing loan of Rs 25 lakh and provision of an additional Rs. 1 lakh rebate in addition to the existing Rs 1.5 lakh rebate are a few positives for the real estate sector which was looking for more lasting benefits from the finance minister in the last full budget before next general elections.
The long pending demand for industry status to the housing sector which is the second largest provider of employment in the country has been ignored again. The industry status would have enabled the real estate community to raise funds at attractive rates and thus would have enabled the developers to offer homes at more attractive prices.
Huge demand for housing estimated at more than 2 million homes will continue to be a dream for people who are looking for shelter. The allocation of Rs 2000 crore for housing in urban areas is too small an amount in view of the huge pent up demand in the urban areas. While provision of Rs 6,000 crores in the rural areas would certainly result in more pucca (permanent) constructions, the finance minister could have been more liberal in meeting the demand of the housing sector in general.
An early introduction of Goods and Services Tax (GST) too would have benefitted the end users as the entire Indian market would get integrated. The finance minister has a made good beginning on this initiative.
The decision to levy a 1% TDS on properties above Rs 50 lakh is clear burden on both developers and customers especially in leading metro cities like Mumbai and Delhi where even a one bed room apartment in distant suburbs of Mumbai cost much more than Rs 50 lakh. Reeling under the burden of high interest rates and the resulting resistance of customers, the developer community has been left to look for funding new projects as the finance minister seems to have overlooked the need to facilitate creation of affordable and reasonably priced housing stock across the country.
A major positive which could trigger indirect push for demand for housing is great emphasis the finance minister has placed on creation of infrastructure on a pan-India basis.
By Ms. Manju Yagnik, Vice Chairperson, Nahar Group