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
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.
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 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.