According to the Finance Minister, there is one factor that can hold us back in realizing our potential as a modern nation; it is the bottleneck of the public delivery mechanisms. He further stated that the Union Budget cannot be a mere statement of government accounts but has to reflect the government’s vision and signal the policies to come in future. He further recognized that an enabling government does not try to deliver directly to the citizens everything that they need but instead, it creates an enabling ethos so that individual enterprise and creativity can flourish.
Specifically on the housing and urban sector, the Finance Minister proposed three key enhancements viz.
• The allocation for Swarna Jayanti Sharari Rozgar Yojana, a programme designed to provide employment opportunities in urban areas, shall receive a 75 percent increase in allocation, from Rs.3,060 Crores last year to Rs. 5,400 crore this year ( the allocation for housing urban poverty alleviation has also been increased from Rs.850 crore to Rs. 1,000 crore this year)
• The 1 percent interest subvention on housing loans upto Rs.10 lakhs where the cost of the house does not exceed Rs.20 lakhs has been extended for another year – upto 31 March, 2011 and
• The Rajiv Awas Yojana for slum dwellers and urban poor announced last year has received an increased allocation of over 700 percent, from Rs.150 crore last year to Rs. 1,270 crore this year.
On the Direct Taxes, the budget has proposed substantial relief to tax payers by broadening the tax slabs by completely exempting tax for income upto Rs. 1.6 lakh, 10 percent tax for income between Rs.1.6 and Rs.5 lakh, 20 percent for income between Rs. 5 lakhs and Rs.8 lakh and 30 percent for income above Rs. 8 lakh. This broadening of tax slabs is expected to increase the affordability of households substantially and a part of this affordability could feed into housing mortgages.
Further, to provide a one time relief to the housing and real estate sector which has been impacted by global recession, pending projects will be allowed to be completed within a period of 5 years (instead of four years) for claiming a deduction on their profits. Also, the norms for built up area of shops and other commercial establishments in housing projects have been relaxed so as to enable basic facilities for the residents.
While all these proposals have been completely growth oriented and are quite welcome, the budget has also proposed a Service Tax on ‘activity of construction’, thereby impacting real estate developers and the end price which the consumer has to pay. This may impact the price lines negatively. However, taking an overall view of the budget, it is a growth oriented budget and is likely to take the overall economy as well as the real estate industry forward.
Source – India Property News
