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Budget 2015

Posted by admin on February 25, 2017
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The budget for fiscal year of 2015-16 announced by finance minister Arun Jaitley on the 28th of February proved to be disappointing for the Real Estate Sector.

Housing for all by 2020 is a major point of the budget directed towards the housing sector.  22,407 crore rupees have been allocated to reaching this goal. The aim is to have 2 crore units of urban housing and 4 crore units of rural housing for the rural areas.

A “Benami Transaction Bill” has been introduced to bring some much needed transparency to the sector. There already Exists a Benami transactions Bill from 2011 which was introduced to tackle the various deficiencies of the first Benami Transaction bill introduce. Benami is the act of holding land in the name of someone other than he who has paid for it. A benami transaction is also that in which land is held under a fictitious name for taxation and illegal purposes.

This bill also seeks to limit the amount of cash used in real estate transactions which is one of the primary reasons for lack of transparency in the sector.  The budget seeks to prohibit the acceptance of any amount over 20,000 in cash towards any sale.

Along with the budget one can expect the allocation of Rs. 70,000 crore for development of infrastructure- roads, rail and agriculture. Also in the budget is the introduction of tax free bonds for infrastructure for roads, rail etc. will bring low cost additional debt funds along with Budget funds.

The rise of service tax from 12.36% is a direct burden on the consumer as it directly affects his own purchasing power and also the cost for the builder who will try as much to pass on the cost to the buyer.

This budget has not provided the buyer with any direct advantages to boost demand of real estate. Rather it has concentrated on ensuring that the sector cleans up its act and streamlines the process for the buyer. The Benami act could result in a slowdown in supply from the builders end

However if this budget manages to successfully  implement its policies to make the sector more transparent, it could result in a wave of fresh investors who had earlier shunned real estate for its lack of transparency.  With a possible slowdown and a rise in demand we could see a long term gains in the market.

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