In a bid to give a boost to the housing demand amid the current pandemic and ongoing festivities, Finance Minister Nirmala Sitharaman on Thursday announced income tax relief for both developers and homebuyers, as well as additional outlay of Rs 18,000 crore for PM Awaas Yojana. As per the announcement, the differential between circle rate and agreement value is being increased from 10% to 20% from today till June 30, 2021, for primary sale of residential units up to Rs 2 crore.
Commenting on the same, Anuj Puri, Chairman, ANAROCK Property Consultants, said, “The increase in the differential between circle rates and agreement value under Section 43CA is indeed a good move. This limited-period offer will benefit both developers and homebuyers.”
For homebuyers, it is a clear added financial benefit to round off the existing offers and discounts. Additionally, the consequential relief up to 20% to buyers of these units under Section 56(2)(x) of the IT Act for the said period will definitely boost demand, especially in the affordable and mid segments.
For developers, this move will help clear unsold stock. As per ANAROCK Research, there are approx. 5.45 lakh unsold units across the top 7 cities priced up to Rs 1.5 crore while another 49,290 units are priced between Rs 1.5 cr and Rs 2.5 cr.
The FM also announcement additional outlay of Rs 18,000 crore for PM Awaas Yojana (PMAY-Urban), which developers said is another welcome step towards fulfilling the government’s vision of Housing for All by 2022. “In fact, the additional outlay is over and above Rs 8,000 crores already spent this year. It will help 12 lakh houses to be grounded and 18 lakh houses to be completed. This will help bridge the housing gap in the country to a good extent and is simultaneously an excellent economic growth driver by creating more employment,” said Puri.
Sudhir Pai, CEO, Magicbricks, said, “The finance minister’s announcement of the Atmanairbhar Bharat 3.0 and the time-bound relief for real estate should ease the stress on the sector. Magicbricks data suggest that over past few quarters consumer preference has been towards the affordable segment as homebuyers are now looking for financial stability. Aspirational buying has taken a back seat. This is also being reflected on our newly-launched Home Loans platform, where the average loan amount searched is Rs.34 lakh with Rs 20 lakh being the most searched loan amount.”
The additional outlay of Rs 18,000 crore over and above the budget allocation of Rs 8,000 crore given to the Pradhan Mantri Awas Yojana (Urban) provides banks with the resources to meet this consumer demand. “Taking care of the high cost of housing in the metro cities, this is available to housing units costing upto Rs 2 crore each. This is estimated to complete 18 lakh houses under the PMAY scheme. The additional relief of upto 20% differential between the sale price and the circle rates till June 2021 will help developers to liquidate vacant stock, even at discounts. This should push sales and start the virtuous cycle in the economy,” Pai added.
Anshuman Magazine, Chairman & CEO, CBRE India, South East Asia, Middle East & Africa, said, “The announcement of additional outlay of Rs 18,000 crore for PM Awaas Yojana (urban) is a step in the right direction towards fulfilling the vision of Housing for All, which will lead to generating employment along with supporting other industries, having a multiplier effect on the economy. Income tax relief for developers and home buyers will encourage transactions and attract first time homebuyers. In addition to this, the infrastructure debt financing support announced by the government in the form of Rs 6000 cr equity will attract more investments in infrastructure development. All these measures will collectively improve India’s competitiveness and will go a long way in boosting the initiative to build a ‘Self Reliant’ India.”