REALTY SECTOR’S THUMBS UP FOR INFRAFRIENDLY BUDGET

Though there were no major sops for real estate, the experts commended the thrust given to rural and infrastructure and expect real estate sector revival on the back of tax relief measures.

UNION BUDGET OF INDIA 2019-20

BUDGET, SPENDING & PERFORMANCE

The budget focusses on reducing red tape, making best use of technology, building social infrastructure, digital India, pollution free India, make in India, job creation in Micro, Small and Medium Enterprises (MSMEs) and investing heavily in infrastructure. Total expenditure for 2019-20 is budgeted at Rs 2,786,349 crore (US$ 417.95 billion), an increase of 14.09 per cent from 2018-19 (budget estimates).

HOW WILL INDIA SPEND?

• Total capital expenditure will be Rs 876,209 crore (US$ 131.43 billion) for 2019-20
• Centrally sponsored schemes have been allocated Rs 331,610 crore (US$ 49.74 billion) in 2019-20.
• Defence budget is Rs 305,296 crore (US$ 45.79 billion) for the first time in 2019-20.
• Amount of Rs 174,300 crore (US$ 26.14 billion) has been approved for pension in the budget 2020.
• The government has allocated Rs 184,220 crore (US$ 27.63 billion), Rs 79,996 crore (US$ 11.99 billion) and Rs 37,478 crore (US$ 5.62 billion) for Food, fertiliser and Petroleum subsidies respectively.

THE UNION BUDGET FOR 2019-20 ANNOUNCED ON JULY 05, 2019 ENVISAGES INDIA AS US$ 3 TRILLION ECONOMY BY THE END OF FY20

THE ECONOMIC UPHEAVAL OF INDIA

• India was a US$ 1.85 trillion economy in 2014 and it has reached US$ 2.7 trillion in five years, the fastest growing major economy and the sixth largest economy in world, compared to 11th largest in 2013-14.
• Metro rail network of 657 km has become operational in the country.
• India target to become US$ 5 trillion economy in the next five years and might become a US$ 10 trillion economy in the next eight years thereafter.
• The Indian economy grew at 6.8 per cent in 2018-19 and fourth quarter growth slumped to 5.8 per cent which was a 17 per cent quarter low.
• Movement of cargo on Ganga is estimated to rise four times in next four years.

  UNLOCKING LABOUR & YOUTH POTENTIAL

• National Sports Education Board to be setup under Khelo India to prepare youth for new age skills, Artificial Intelligence, IoT, Big Data, 3D Printing, Virtual Reality etc.
• National Research Foundation to be established to fund, coordinate and promote R&D.
• Rs 400 crore (US$ 60 million) provided for ‘World Class Institutions’ for FY20.
• "Study in India” to bring foreign students to higher educational institutions.
• The Government of India has decided to extend the pension benefit to about three crore retail traders & small shopkeepers whose annual turnover is less than Rs 1.5 crore (US$ 0.22 million) under “Pradhan Mantri Karam Yogi Maandhan Scheme.

LOOKING AFTER OUR FARMERS

• Government is planning to form 10,000 new Farmer Producer Organizations, to ensure economies of scale for farmers over the next five years.
• Government will work with State Governments to allow farmers to benefit from e-NAM (National Agriculture Market).
• Government might replicate “one count: Zero Budget Farming” model which can help in doubling our farmers’ income in time for our 75th year of Independence.
• The focus of the government is on the “Pradhan Mantri Matsya Sampada Yojana” (PMMSY) for addressing critical gaps in the value chain, including infrastructure, modernization, traceability, production, productivity, post-harvest management, and quality control.

CAPTURING AN INSPIRING PICTURE

• The become a US$ 3 trillion economy by the end of 2019.
• Make in India with emphasis on MSMEs, Start-ups, defence manufacturing, automobiles, electronics, fabs and batteries, and medical devices.
• Building physical and social infrastructure.
• Digital India reaching every sector of the economy.
• India plans electricity, clean cooking facilities for all Indian families by 2022.
• To ensure ‘Har Ghar Jal’ by 2024
• 125,000 km of road to be upgraded over next 5 years at a cost of Rs 80,250 crore (US$ 12.03 billion)
• Aims to achieve housing for all by 2022
• Blue Economy
• Healthy society – Ayushman Bharat, well-nourished women & children. Safety of citizens.
• Team India with Jan Bhagidari. Minimum Government Maximum Governance, 19.5 million household to be built in rural areas.

ROADMAP FOR INFRASTRUCTURE

• Ministry of Railways have been allocated Rs 94,071 crore (US$ 14.11 billion) in 2019-20.
• The government has suggested the investment of Rs 5,000,000 crore (US$ 750 billion) for railways infrastructure between 2018-2030.
• Metro rail network has reached to 657 Km.
• Operating ratio improved by 95 per cent in 2019-20.
• Government has announced to invest Rs 10,000,000 crore (US$ 1.5 trillion) in infrastructure over the next five years.
• To upgrade 1,25,000 kms of road length over the next five years, the estimated cost of Rs 80,250 crore (US$ 12.03 billion) is envisaged under Pradhan Mantri Gram Sadak Yojana-III (PMGSY).
• 30,000 kms of PMGSY roads have been built using Green Technology, Waste Plastic and Cold Mix Technology.
• Government has ensured power availability to states at affordable rates through model – One Nation, One Grid.
• Government has proposed to permit investments made by Foreign Institutional Investor’s (FIIs)/Foreign Portfolio Investments (FPIs) in debt securities issued by Infrastructure Debt Fund.
• Road - Bharatmala phase 2 going to be launched to develop the state road networks.
• Government has finalised the model tendency law- promotion of rental housing.

WHAT ABOUT OUR TAXES?

• Individual taxpayers with annual income up to Rs 500,000 (US$ 7,500) will get full tax rebate and hence will not be required to pay any tax.
• Tax Deducted at Source (TDS) of 2 per cent on cash withdrawal exceeding Rs 1 crore (US$ 0.15 million) in a year from a bank account to promote less cash economy.
• Effective tax rate for individuals having taxable income above Rs 2 crore (US$ 0.30 million) has been increased.
• Limit for applicability of lower corporate tax rate of 25 per cent increased from Rs 250 crore (US$ 37.50 million) to Rs 400 crore (US$ 60 million).
• Enhanced interest deduction up to Rs 350,000 (US$ 5,250) for purchase of an affordable house.
• The government increased income tax surcharge for HNIs (high net worth individuals) earnings more than Rs 2 crore (US$ 0.30 million) a year. Those earning between Rs 2-5 crore (US$ 0.30-0.75 million) will have shell out 3 per cent more, with surcharge rate being increased from 15 per cent to 25 per cent. Those earning above Rs 5 crore (US$ 0.75 million) will have to shell out a surcharge of 37 per cent, from current 15 per cent.
• No charges or Merchant Discount Rate (MDR) on specified digital mode of payments. These modes are to be compulsorily provided by large businesses.
• The government announced Rs 150,000 (US$ 2,250) income tax deduction on interest paid on loans for purchase of electric vehicles.
• Sabka Vishwas Legacy Dispute Resolution Scheme proposed for quick closure of service tax and excise related litigations.
• To increase Special Additional Excise duty and Road and Infrastructure Cess each by one rupee a litre on petrol and diesel.
• It also proposed to increase custom duty on gold and other precious metals from 10 per cent to 12.5 per cent.
• Scheme of faceless electronic tax assessment.
• Aadhaar and PAN to be interchangeable and permit those who do not have PAN to file Income Tax returns by only citing their Aadhaar number.
• Taxpayers having annual turnover of less than Rs 5 crore (US$ 0.75 million) can now file quarterly returns.
• Fully automated GST refund module shall be implemented.
• An electronic invoice system is proposed that will eventually eliminate the need for a separate e-way bill.

CHIPPING IN FOR MICRO, SMALL & MEDIUM ENTERPRISES Government has proposed granting of loans up to Rs 1 crore (US$ 0.15 million) for MSMEs within 59 minutes through a committed online portal. Under the Interest Subvention Scheme for MSMEs, Rs 350 crore (US$ 52.50 million) has been allocated for FY 2019-20. Government will create a payment stage for MSMEs to enable filing of bills and payment thereof on the platform itself. The Government e-Marketplace (GeM) is being extended to all Central Public Sector Enterprises (CPSEs), providing more opportunities for MSMEs to sell their products.

Niranjan Hiranandani, National President- Naredco, “Initiative to promote rental housing and housing for all by the year 2022 would be highly successful. The government’s idea to provide affordable housing will be a possibility in almost all the cities except Mumbai where there is a paucity of land. I believe that the additional incentive of Rs 1.5 lakh on interest on loans borrowed under the affordable housing would give a boost to the real estate sector further. The government’s proposal to invest more than Rs 100 lakh crore for infrastructure over the next 5 years is also a welcome move.”

Satish Magar, President, CREDAI National, “I am personally happy that Government acknowledges the contribution of private sector and the tax payer in nation building. We are happy that Government claims real estate reforms in last five years among three biggest policy initiatives of 2014-19. There are a host of measures to boost financial sector. It is to the credit of the Government to reform multiple Labour Laws and to rationalise them into four codes.”

Nayan Shah, President - CREDAI-MCHI “Madam FM has presented a very broad vision statement of the government highlighting the key and reforming issues. The industry welcomes the FM’s proposal to extend the 25% corporate tax to all companies up to Rs.400 crores income. Recapitalization of PSU banks by 70k crores and a onetime credit guarantee for NBFCs should help ease the liquidity issues and are a welcome step.”

Ajay Piramal, Chairman, Piramal Group, “We are happy to see the government signal its confidence for a well-financed, robust NBFC sector through the one-time six-month partial credit guarantee. This development would be an important milestone for the NBFC sector that is crucial for the sustained growth of the economy. We welcome the regulations and norms that have been proposed by the Finance Minister on the NBFC sector that would raise transparency and reinstate trust in this vital sector.”

Amit Wadhwani, Co-founder, SECCPL, “The key reforms that will impact the real estate industry include the further development of the ‘Affordable Housing for All’ initiative, with a fund of 4.83 lakh crore sanctioned for the construction of 84 lakh houses under the Pradhan MantriAwasYojna. With attempts of attracting NRI investments, giving a boost to rental housing, developing major infrastructure projects, ensuring job creation and advancing economic development, the Union Budget of 2019 is a sign of positive things to come.”

Sachchidanand Rai, Chairman – Eden Realty Group, “This budget is based on the philosophy of reform, perform and transform. Naturally, the focus is more on rural economy, women, youth and infrastructure. Special sops to buyers of affordable housing units of up to 45 lacs will give boost to housing sector in the short term.”

J C Sharma, Vice Chairman and Managing Director, SOBHA Limited, “Unavailability of land or high cost of land has been a hindrance to affordable housing projects. On this, the Government has proposed to make land parcel from public entities for such projects, which is a positive step. Increasing affordable housing carpet area was an important demand of the sector, which has been addressed appropriately. By keeping the income tax slab rates unchanged, the Government has protected the interest of the tax payers.”

Manoj Gaur, MD, Gaurs Group & Chairman, Affordable Housing Committee, CREDAI, “CREDAI’s long standing proposals to reform archaic rental laws and promote public housing on government land figure have been among the immediate policy agenda outlined by Finance Minister.”

M Murali, Chairman and Managing Director, Shriram Properties Ltd. “This is a well calibrated ‘Scale up India’ Budget focused on Start – ups and Rural India; bringing ‘Connectivity’ as the major thrust area to minimise the rural and urban divide. In the matter of support to the real estate sector, the industry is confident that the Finance Minister will revisit the sector’s expectations including initiatives such as, Single window clearance for approval, rationalisation of tax and stamp duty across the country.”

This is a well calibrated ‘Scale up India’ Budget focused on Start – ups and Rural India; bringing ‘Connectivity’ as the major thrust area to minimise the rural and urban divide.

Gaurav Gupta, Director Omkar Realtors & Developers states, “Additional exemption in income tax on home loans under affordable housing by 1.5 lakhs for homes upto 45 lakhs is a good step by the Government. This will encourage more and more fence sitters and first-time home buyers to take quick decisions regarding property purchase.”

Rishi Jain, Managing Director, Jain Group, “The message is very clear, make housing affordable and make only affordable housing. Our developer fraternity needs to understand and appreciate the same. The writing on the wall is that super rich and those in the highest tax brackets should not expect any sops and in fact should cross subsidise the poor. The budget signals the foundation of a truly balanced and self-disciplined society.”

Bijay Agarwal, Managing Director, Salarpuria Sattva, “With the government allowing foreign institutional investors(FII) and foreign portfolio investments(FPI) to capitalize on their debt papers with a one-time, partial credit of Rs 1 lakh crore to public sector banks for the acquisition This is a well calibrated ‘Scale up India’ Budget focused on Start – ups and Rural India; bringing ‘Connectivity’ as the major thrust area to minimise the rural and urban divide. 26 JULY 2019 | realtyplusmag.com of high-rated NBFC assets will be a positive step in resolving the liquidity crisis faced by NBFC’s. The proposed reforms to be brought under the Model Tenancy Law is likely to enhance rental housing and increase the interest of investors, who are looking for rental income.”

Arjunpreet Singh Sahni, Executive Director, Solitaire Group, “Budget 2019 has turned out to be a morale booster for all the stakeholders of the real estate industry with its intent to continue the ongoing infrastructure restructuring and development of housing projects across the country. With its provision of PSU bank recapitalisation of Rs 70000 crore, the industry is expected to come out of the ongoing liquidity crisis situation.”

Budget 2019 has turned out to be a morale booster for all the stakeholders of the real estate industry with its intent to continue the ongoing infrastructure restructuring and development of housing projects across the country.

Kapil Sharma, Partner, Lakshmikumaran & Sridharan Attorneys, “The definition of the affordable housing under Section 80 IBA of the Income Tax Act, 1961 has been amended in line with the amended GST provisions allowing a 100% deduction to developers on profits and gains from housing projects. Further boost is the reduction in holding period for long-term gain on immovable property from 36 months to 24 months.”

Kaushal Jain, Director, Arihant Group, “The Union Budget focus remains on Affordable Housing. Under Pradhan MantriAwasYojna over 80 lakh houses have been sanctioned and 1.95 crore houses proposed to be provided under PMAY Grameen by 2021 is a very positive move and will boost the affordable housing sector.”

Kishore Jain, President, CREDAI Bengaluru, “Union Finance Minister has focused more on the infrastructure development by allocating 100 lakh crore for the next 5 years which is a commendable announcement. Merging foreign portfolio investment route with NRI portfolio investment route will bring in more investment. Overall, it sounds like a balanced budget but, the key will lie in the effective implementation of the various welfare schemes announced by the government.”

Sunil Rathi, Director, Waaree Energies, “With the economic viability of the solar power coupled with the fact that conventional energy sources now have to match solar parity, it would have been heartening to see more focus on solar. The only silver lining in the budget is the progressive movement towards adoption of Electric Vehicles (EVs) and the incentives being offered to the end consumer.”