Separately, the government also offered income tax relief to help builders clear inventory and boost demand from home buyers
'A number of measures have been taken in the past several months for revival of the Housing and Real Estate Sector,' said Nirmala Sitharaman
Bengaluru: An additional outlay of ₹18,000 crore for Pradhan Mantri Awas Yojana (Urban), over and above the ₹8000 crore allocated in the budget, by finance minister Nirmala Sitharaman on Thursday may help in giving an extra push towards the government’s ‘housing for all’ mission.
“ ₹18,000 crore will be provided over the Budget Estimates for 2020-21 for Prime Minister Awas Yojana – Urban (PMAY-U) through additional allocation and Extra Budgetary Resources. A number of measures have been taken in the past several months for revival of the Housing and Real Estate Sector. These measures have contributed to fair recovery in this sector," Sitharaman said while announcing the third tranche of economic stimulus.
Abhishek Sharma, partner (co-head - real estate), Cyril Amarchand Mangaldas said the extra budgetary resource of ₹18,000 crore provided under PMAY will enable smooth implementation and completion of affordable housing project and help the housing for all initiative by 2022.
“…The increase in allocation to PMAY-Urban should result in a boost to construction activity along with increased demand for steel and cement and job opportunities," said Gaurav Karnik, Partner and National Leader – Real Estate, EY India.
Niranjan Hiranandani, president (National) of industry body Naredco said the fresh allocation will translate into more homes for home seekers.
Separately, the government also offered income tax relief to help builders clear inventory and boost demand from home buyers as part of the stimulus package aimed at supporting economic recovery.
The incentive involves amending the Income Tax Act to allow a 20% differential between the actual sale price of land or building and the stamp duty value, Sitharaman said.
Shubham Jain, senior vice-president and group head, corporate ratings, ICRA said increasing the permitted differential between circle rate and sale agreement value to 20% from 10% on sales valued up to Rs. 2 crore is a welcome move for the residential realty sector, given that high circle rates are an issue for both buyers and sellers.
“Stagnation in real estate prices over the past few years, together with property specific issues, such as weak location or specifications, have led to circle rates being higher than market rates in certain localities. Since the difference is taxed as income in the hands of both the sellers and the buyers, significant differentials have resulted in challenges in liquidation of the inventory. With this move, those issues get eased to some extent," Jain said.
Hiranandani however said the cap on the flat value to be eligible for this being ₹2 crore will result in most projects in metros not being able to take advantage of this.
“Iit has consistently been pointed out by industry bodies that price points in metro cities need to be kept in mind while offering any such relaxation," he said.