Budget 2020: What did the real estate sector gain?

Budget 2020 has come up with several surprises for the real estate sector, as well as the common man. There are several demands, which the realty sector was expecting to get addressed in the budget 2020, but only a few got the attention of the finance minister. Let us look at some of the key announcements made in the budget and its impact on the realty sector.

Farshid Cooper, MD, Spenta Corporation says, “The most telling thing to come out of Budget 2020 is the tax relief to individuals. The amended tax slabs will ensure more disposable income in the hands of the middle class. This could lead to reviving the consumption cycle in the realty sector and kick-starting the economy. Further, with additional savings, individual investments in housing, especially affordable housing could see an uptick in the near future.”

Some experts have contrary views as they believe that the non-applicability of the deduction on housing loans under the new optional individual tax structure, can act as a significant deterrent for those contemplating availing of housing loans.

Relaxation in cases where the agreement value is lower than the circle rate

Presently, if the value at which the developer sells his flat to a buyer is lower than the stamp duty valuation by more than 5%, the difference of stamp duty value over the agreement value is taxed in the hands of the developer, as his business income. The budget proposes to increase the tolerance limit of the difference between stamp duty valuation and agreement value, from 5% to 10%. This proposal will help reduce some of the litigations in genuine cases, where the stamp duty valuation still remains high in spite of a correction in the prices of real estate.

The guarantee scheme for NBFCs and HFCs

The liquidity crisis faced by the NBFCs/HFCs in 2019 is still not completely over. The Budget 2020 proposal to further enhance the credit guarantee scheme for NBFCs and HFCs, is expected to provide some respite to market. “The government’s decision to further bolster the guarantee scheme for NBFCs and HFCs and offer subordinate debt to MSMEs, will to a certain extent, help bring liquidity in the market alongside the abolition of DDT,” opines, Kaushal Agarwal, chairman, The Guardians Real Estate Advisory.

Comments Section

  • - Mazhar Mohammad, Chartviewindia 04/01/2020Reply

    Intraday traders can look to go long if Nifty sustains above the 12,300 level for more than 30 minutes on Friday and look for a target of 12,390. Contrary to this, a strong close below 12,168 level may lead to weakness in Nifty

    • - Gaurav Ratnaparkhi, Sharekhan 04/01/2020Reply

      Nifty is now a stone’s throw away from its all-time high of 12,293. Structurally, it has climbed towards the upper end of the consolidation range i.e. 12,300. Once the 12,300 level taken out, it will march towards 12,350 and subsequently to 12,400, which is near the rising trendline and daily upper Bollinger Band. The 12,220-12,200 zone will act as immediate support

  • - Ashwin Patil, Senior Research Analyst 04/01/2020Reply

    Among two-wheelers, we prefer Hero MotoCorp as it is a proxy to the economy and rural growth, and an expected good Rabi crop output will drive sales in rural India (55% of volumes). We also like Bajaj Auto, which is now finding good traction in exports markets. On the PVs, we still like Maruti as it is a market leader in PV segment and has a wide array of models in all the segments. Its strength in the rural markets is also its positive. We also like M&M, as robust Rabi crop output and increased MSPs will trigger UVs as well as FES growth. Within the CV space we like Ashok Leyland which is away from any global headwinds. Any news on scrappage policy may lead to a sudden spur in CV stocks

    • - Chandan Taparia 04/01/2020Reply

      Nifty has been consolidating between 12,118 and 12,293 levels since last 11 sessions and now a decisive range breakout with followup action can drive the fresh leg of rally. The index has to continue to hold above 12,250 level to witness an up-move towards the 12,350-12,400 zone, while key support has shifted to 12,150 level

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