Exceeds expectations for real estate sector
16 March 2012
For the real estate and housing sector, this years' budget has exceeded expectations given the pressure on fiscal situation.
Most importantly, it has taken into account the crying need to focus on affordable housing sector by allowing ECB for low cost housing, road as well as construction and setting up of a Credit Guarantee Trust Fund.
Withholding tax on ECBs for affordable housing has been reduced from 20 per cent to 5 per cent for three years and this move will help ease the liquidity in the sector.
Also, investment-linked deduction of capital expenditure in affordable housing is proposed to be provided at 150 per cent as opposed to 100 per cent.
All these measures will encourage supply of low cost housing. For the home buyer, the 1 per cent interest subsidy scheme has not been rolled back, however there were expectations that subsidies through this scheme would be raised.
While the industry had really hoped for the exemption limit to increase from Rs1.5 to Rs3 lakh, that hasn't happened and the net impact of what could have happened and could have triggered more demand and what has translated has left something to be desired.