Budget 2020 has come up will so many surprises for various sectors including Real Estate. Nirmala Sitharaman, Minister of Finance, Presented the union Budget 2020-21 on February 1. Changes in Income Tax slab is also proposed in Budget 2020. Mixed reviews in the construction industry are coming. In the list of several demands of Real Estate, Only a few demands got the attention of the Finance Minister. So, before moving forward to Budget 2020: How Real Estate React? Let us look at some of the few announcements made in the Budget 2020.
Highlights on Real Estate Sector- Budget 2020
So let’s discuss Budget 2020:How Real Estate React. Finance Minister proposes a change in the Income-tax slab. In the context of the highlights:-
- Tax Payers have the option to choose between the existing and new income tax regime
- The new regime has slashed income tax rates and new income tax slabs but no tax exemptions.
- Which tax regime would be beneficial, i.e, result in lower tax payable for each individual is depending on their income composition and investments.
New Income tax slabs proposed in Budget 2020
The new income tax slab in the Budget is mentioned below:
The Finance Minister has proposed to get rid of 70 types of tax exemption out of 100. Because many people believe that Budget 2020 is tax relief to the individual. so, for middle-class people, it will be easy to save more income in their hands. And, this will help in reviving the current economic situation going on. As some experts believe in deduction on housing loans. So, in the near future, there is a high chance of investment in housing.
Growth to Infrastructure: Budget 2020
The finance minister has announced various schemes for the growth of the infrastructure. With the announcement, the huge fund has been allocated for industry and commerce. The finance minister has also announced the allocation of Rs 27,300 crores for industry and commerce. The development of the national highway is also in the pipeline. And this will surely help in the developmental change in the Real Estate sector.
“AFFORDABLE HOUSING” extended in BUDGET 2020: How Real Estate React
The government has announced “Housing for all” and “affordable housing” in the last budget 2019. So, that everybody avails of this facility. Also in the previous budget 2019, the government has introduced tax benefits for an affordable home buyer under section 80EEA. For deduction up to Rs. 1.5 lakhs, Against interest payment. The end of this scheme was 31st March 2019, but still after the completion of the deadline. The finance minister announced the extension of the benefit till 31 march 2021.Under section 80EEA.The total deduction is available on interest paid to slay at Rs. 3.5 lakhs for next year also.
In this year 2020 “The Union Budget” continued the focus on the affordable housing sector, by extending the permitted additional deduction of up to Rs. 1.5 lakhs for interest paid on loans. Borrowed for the purchase of an affordable house valued up to Rs. 45 lakhs, by one year.
The Scheme Guaranteed For NBFCs and HFCs
The Budget 2020 proposed to further enhance the credit guaranteed scheme for NBFCs and HFCs.In the year 2019, the liquidity crisis faced by the NBFCs and HFCs was still not completed over. So, the credit guaranteed continued further in Budget 2020. Also, it is expected to provide some relief to the market. This will help bring liquidity in the market alongside the abolition of DDT.”
Upliftment to Infrastructure in Budget 2020
In the budget 2020, several announcements are made to uplift the infrastructure growth. Finance Minister also announced various schemes regarding this. Huge funds will allocate to industries and commerce. In the year 2020 various projects are in pipeline. The national infrastructure pipeline includes 6,500 projects across the country. Finance Minister also announced the allocation of Rs 27,300 crores for industry and commerce in FY21. With this announcement, plans for developing strategic national highways have also been announced. This will help brings about a developmental change in the real estate sector as well.”
Warehousing Segment: Positive Impact
For the development of warehouses “The national logistics policy” and “viability gap” fund would provide a stimulus for increasing warehousing supply. Which is expected to rise from 211 million sq. ft. in 2019 to 379 million sq ft in 2023.Net absorption of 36 million sq ft. in 2109 will get a further increase.
Other Basic Announcements in Budget 2020:How Real Estate React.
In the budget 2020, the Finance Minister also announced to set up 5 new smart cities, under the PPP model. 100 new airports are proposed across the country. “Guarantee on the bank FDs from Rs 1 lakhs to Rs 5 lakhs” the government has also proposed to enhance. “Finalizing to built 100 airports will be a massive infrastructure initiative to develop all cities and growth.
However, the Budget of 2020 has been disappointing for various needs. The only relaxation has been an extension on the tax holiday for affordable housing. Also with the deduction on the Income Tax slab cuts, it is possible that the economy may revive and overall the demand for the Real Estate will increase.
The Government has also taken a few steps to increase the better Infrastructure. By announcing several projects in the upcoming future in Budget 2020. We can expect this upcoming project will help the Real Estate sector to grow in the near future.