In order to provide relief to the ailing actual estate sector, the Union Finance Minister produced a slew of announcements. FM Nirmala Sitharaman announced debt financing of InVITs and REITs by foreign portfolio investors (FPI) to make appropriate amendments in the relevant legislations. This will ease access of finance to InVITS and REITs, augmenting funds for infrastructure and actual estate sectors. In a different announcement, offering relief to taxpayers, FM informed that advance-tax liability on dividend earnings shall arise only following the declaration/payment of dividend. “The dividend paid to Real Estate Infrastructure Trusts or Infrastructure Investment Trusts (REIT/InvIT) shall be exempt from TDS,” Sitharaman mentioned. FM also proposed to clarify that deduction of tax on incomes such as dividend earnings of FPIs may well be produced at treaty price. “It is also proposed to exempt dividend payment from levy of Minimum Alternate Tax (MAT) for foreign companies if the applicable tax rate is less than the rate of MAT,” she added.
Here’s what Real Estate specialists say-
Surendra Hiranandani, Chairman and Managing Director, House of Hiranandani
With the development outlook hunting promising and help in terms of government spending, we will witness noteworthy traction in the actual estate sector as well this year. Though actual estate has not got something straight from this spending budget, there are announcements that will indirectly assistance the sector. Allotment of a enormous capital expenditure corpus in order to boost and help national highway projects, roads and other ancillary infrastructure show the continued commitment of the Government to strengthen connectivity across the nation which in turn will largely strengthen actual estate more than the next couple of years. While reasonably priced housing continued to stay a priority location for the government with couple of more reforms, the government could have provided a additional enhance to actual estate which fuels the Indian economy as it is the second-biggest employer following agriculture and supports more than 250-allied industries.
There have been quite a few pressing issues in the actual sector that have not been addressed such as easing liquidity, reduction in levies/taxes, tax deductions on residence loans to give impetus to purchaser sentiment, granting of sector status to the all round actual estate sector and implementation of single window clearance amongst other individuals. Overall, though the social sector has received very good help and is welcome, we are convinced that the government will do its finest to get the economy to bounce back, and sustain extended term development of the actual estate sector as well with substantial measures in the close to future. We also hope that there will be more announcements quickly to boost ease of performing enterprise for the developers and are optimistic that with green shoots in the economy in sight, the actual estate sector is prepared for explosive development in the post pandemic era.
Rohit Poddar, Managing Director, Poddar Housing and Development Ltd. And Joint Secretary, NAREDCO Maharashtra
For reasonably priced housing, the extension of deduction on payment of interest by one more year will assistance in supplying the a lot-required comfort for the residence purchaser. Affordable housing tax vacation extension up to March 2022 will enhance the current momentum in housing demand. Furthermore, relaxation of tax to NRIs, an more interest deduction on the loans, and no TDS on REITs will potentially assistance the actual estate sector in rising the liquidity and money flow. Giving relief to NRIs from double taxation will give a sentiment enhance to the actual estate sector.
Anshuman Magazine Co-Chairman, CII National Committee on Real Estate Housing and Chairman and CEO – India, South East Asia, Middle East and Africa, CBRE
In a move to extend efforts towards an unorganized labour force, the launch of a new portal (to gather details on gig, developing, and building-workers amongst other individuals) will allow targeted relief measures like labour monitoring and provision of different rewards/schemes for these workers. This is most likely to be valuable for the Real Estate sector as the sector continues to be a top employment generator in the nation. The actual estate sector also appreciates the reality that FM extended the interest deduction for residence purchasers and the tax vacation for reasonably priced housing projects (each by a year) which should really also catalyse more development. Additionally, to provide for housing for migrant workers, the FM proposed tax exemption for notified Affordable Rental Housing Projects. Details on this tax exemption are awaited. Proposing to make dividend payments to REIT (estate investment trusts) and Infrastructure investment trusts exempt from TDS this year is a different excellent move as it will be beneficial in addressing the liquidity scenario in the actual estate sector.
Debt Financing of InVITs and REITs by Foreign Portfolio Investors has been enabled by suggesting amendments in the relevant legislations. This is most likely to ease access of finance to InVITS and REITs therefore augmenting funds for the infrastructure and actual estate sector. It is also vital to note right here that all of these reforms indicate PM’s Modi’s efforts towards a spending budget which is in continuation of government efforts to revive sectors impacted by pandemic. Needless to say, today’s spending budget has offered the hope to infrastructure and actual estate industries and will go a extended way in making sure integrated improvement of each the sectors.
Ketan Sengupta, CEO of Bengal Peerless Housing Development Company
Budget 2021 is reasonably practicable with lot of positive elements. The 1.03 lakh crore investment in National Highway projects is a excellent enhance for the infrastructure sector that will lead to financial development and pave the way for employment generation. The Extension of incentive schemes for startups and MSME is also a move in the ideal path for development. Other positives involve rising limit of FDI in insurance coverage sector and higher funding for overall health care sector. However this year’s spending budget is a disappointment for the actual estate sector in even though tax vacation for reasonably priced housing projects has been extended till 31st March 2022, limits on I-T exemption for housing loan beneath section 24 (b) 80EEA have remained unchanged. Stock in hand for developers following two years of completion is regarded as deemed demand and taxed beneath section 23(5). A relaxation of the mentioned section would have been a favourable outcome for actual sector.