Sanjay Dutt, Executive Managing Director – South Asia, Cushman & Wakefield, offers his views on Budget 2015-16:
The real estate sector is largely disappointedly with this year’s budget as except for REITs and curbing of benami transactions there was no specific mention alluding to the sector this time around unlike the last budget presentation. Further, the increase of nearly 2 per cent in service tax is going to increase the overall costs of buyers and those availing services from the real estate sector, creating further stresses across the sector.
The finance minister has missed an opportunity to use real estate sector as another trigger for economic growth. Some of the long pending demands of the real estate sector pertaining to removal of DDT and MAT in SEZs, reintroduction of Section 80-IB for low-cost housing, extension of interest subvention for affordable housing etc. have been ignored yet again.
However, on the positive side, the withdrawal of wealth tax could boost investments by the middle-class and some sections of the high net worth individuals, as they now no longer need to worry about getting taxed each year on long-term investments in the sector. Secondly, allowing rationalisation of capital gains on transfer of assets to REITs has actually taken care of a key demand by the sector. Further, the announcement of lowering corporate tax from by 5 per cent in the next few years will also help to attract further investments from domestic and foreign companies.
There are other indirect benefits to the sector, especially in commercial real estate, as the government has taken a number of proactive steps to boost demand for real estate through a focus on infrastructure development on a massive scale as well increase in investments by entrepreneurs and companies.
The 2015-16 budget delivers a controlled but big bang push aimed at a sustainable economy through initiatives that accelerate growth, enhanced investments and ensure benefits to all stakeholders. In a well thought and finely nuanced approach, instead of introducing dramatic concessions to boost the economy into double digits growth, the PM and FM have instead focused on making definitive structural adjustments to policy and frameworks that will deliver all round growth across the agricultural, manufacturing and services sectors by encouraging investments and entrepreneurship (by improving the ease of business) and improving the infrastructure( through investments and more reliable policy structures).
Specifically, instead of introducing policy measures that focus only on a year’s growth at a time, the government has laid out a long-term road map that will achieve housing, employment and better income generation, health and welfare for all by 2022.
