Budget 2017 -2018 is really expected to hold promise for the real estate sector. The Budget 2017 provides the reforms in the industry in the form of tax incentives and other provisions of the tax related to the income tax. The real estate sector being the largest second contributor to the economy is experiencing certain issues in their growth. The relaxation of the Foreign Direct Investment norms had allowed inflow of the FDI that supports the growth of the sector. The demonetisation had affected the sector growth for a short term. The real estate developers in the sector are facing some issues with the development.
The act related to the real estate such as Real Estate Regulation and Development Act (RERA), 2016 and Benami Transaction Act are passed to bring the changes and transparency to the sector. The accessing of the funds is made simpler and cheapest as compared to other means. The reduction in the rates of the interest in addition to that of the demonetisation will increase the purchasing power of residential buyers that will in turn increase the growth of the sector. The builders in India are expecting the real estate sectors for the growth that was promised in the Budget 2017 – 2018. The demand-supply gap should be reduced.
Tax associated with the Section 8o-IA and Section 35AD of the Act for undertaking, which in turn develops or operates, maintains the facility of the infrastructure have been further extended to township projects. These acts and provisions are favourable for increasing the promotions of the real estate developers for improving the construction of the infrastructure facilities such as the roads, educational facilities, medical facilities and sanitary facilities.
There are issues that pertain to the Joint Development Arrangement (JDA). The suitable controls should be brought for solving the JDA. Finance Act, 2016 had included the Section 8o-IBA with the grants that exempts house projects with the condition that project should be finished within the time period of 3 years from the approved date. No exemption is allowed for the MAT projects since separate amendments are added for provision of exemptions to those MAT projects.
If the exemption is not provided, it leads to attract 20 percent of taxes below MAT that leads to disallowance of the grants of tax incentives. Finance Minister engaged in revival of infrastructure of corporate companies such as SEZs and developers. MAT exemptions are applicable to the infrastructure companies that lead to the economic growth with the investments in infrastructure developments. The provisions of Section 43CA and Section 50C of the Act used for deemed taxation should be removed by tacking the understatement of the consideration of investigation mechanisms. The builders in India believe that the Budget 2017-2018 will lead to develop the real estate sector.
Additional Read: RERA for the profit of buyers- Guide