The last quarter of any fiscal year is the time when some of the most crucial financial events take place, and the most important one is the presentation of the Union Budget. It is one such occasion when rich or poor, working class or entrepreneurs, Delhiites or even Tamilians, everyone looks in anticipation. The same thing happened a few days back, when the Finance Minister Arun Jaitley, presented the Union Budget 2018. Every public and government department got its share. In this post, I am trying to bring some limelight on the things that are given to the real estate sector in the Union Budget 2018.
Affordable Housing Fund
Out of many offerings, one thing that the real estate get in the Union Budget 2018 was dedicated Affordable Housing Fund (AHF) the National Housing Bank (NHB) for the government’s pet project, Housing for All by 2022. The fund that will be issued in the Union Budget 2018 fund will be used for the construction of 51 lakh homes in rural areas and 37 lakh homes in urban areas in the year 2018-19.
Another big announcement made in the Union Budget 2018 was to build 100 smart cities that are complemented with all state-of-the-art amenities. In the Union Budget 2018 presentation, Finance Minister Arun Jaitley said, “I am happy to inform that 99 Cities have been selected with an outlay of Rs 2.04 lakh crores. These cities have started implementing various projects like Smart Command and Control Centre, Smart Roads, Solar Rooftops, Intelligent Transport Systems, Smart Parks.”
Real Estate Investment Trust (REIT)
The market regulatory and government have taken requisite measures for the growth of monetising vehicles, such as Real Estate Investment Trust (REIT) and Infrastructure Investment Trust (InvIT) in India. In the Union Budget 2018, it was also said that the government will also begin the process of monetising some selected CPSE assets by using Infrastructure Investment Trust (InvIT) from next year onwards.
Before the presentation of the Union Budget 2018, at the time of taxing income from business profits, capital gains, and from other sources with respect to the transactions of immovable properties, the circle rate or the consideration, whichever is higher, is adopted, while the difference is calculated as the income, both in the hands of the seller and purchaser. This variation may happen with different properties constructed in the same area due to numerous factors, including the location and shape of the property.
To reduce this hardship in all the real estate transactions, Finance Minister Arun Jaitley, in his Union Budget 2018 said that no adjustment will be done in cases where the value of circle rate does not exceed the consideration by 5%.