Finance Minister Nirmala Sitharaman presented the Union Budget 2020 anchored around the 3 major themes of Aspirational India, Economic Development and a Caring society. The Budget focussed on proposing new schemes for mostly every sector, with the objective of reviving the Indian Economy through proposing changes in Income Tax Slabs, tax reforms, policy changes for the Real Estate Sector, revitalization of the Automotive sector, boost for MSMEs, Bank reforms and many more.
From a real estate perspective, key highlights are as follows:
1. Infrastructure - The government continued to emphasize on infrastructure development – a key driver for the country’s economic growth. An amount of INR 100 lakh crore has been allocated to be invested in infrastructure, with a focus on several aspects:
- National Logistics Policy would be released soon, and a single-window e-logistics would be introduced for faster processing.
- Accelerated development and commercialisation of 6000kms highways are targeted. Additionally, around 2000 km of strategic highways have been proposed to be built.
- In a much-awaited move, it was announced that the Bengaluru suburban rail with a project size of INR 18600 Crore will receive 20% central funding while 60% funding will be facilitated externally. The Chennai-Bengaluru Expressway project is also slated to start soon.
- Meanwhile, Delhi-Mumbai Expressway is to be completed by 2023.
- An allocation of INR 1.73 Lakh Crore was made for transport infrastructure for the period 2020-21.
- In keeping with the Udaan scheme, it was proposed to develop 100 additional airports by 2023.
- Proposal was also made to boost economic activity along riverbanks.
- The power sector was allocated a sizable quantum of INR 22000 Crore.
2. Smart cities – The budget aimed at developing 5 new smart cities in collaboration with states, as a PPP initiative. 100 cities have already been selected in the country as part of the Smart Cities Mission, and the inclusion of the additional cities is a welcome move.
3. Affordable housing – During the last budget, The Finance Minister, had announced an additional deduction of up to INR 1.5 lakh for interest paid on loans taken for purchase of an affordable house. The date of loan sanction for availing this additional deduction has been proposed to be extended by one year, beyond 31st March 2020. The tax holiday provided to developers for affordable housing projects has also been extended for one more year. This signifies the government’s continued effort to provide housing for all and revive the residential property market with support from the developers.
4. Datacenter parks – In order to boost the new economy by factors like artificial intelligence, data storage, et al, the Finance Minister proposed a policy to enable the private sector to develop Data Centre parks throughout the country. The participation of the private sector in this venture holds immense potential to garner investments soon.
5. Real estate transactions – In a significant move, the Union Budget, in a bid to reduce complexities in real estate transactions and bring relief to the sector, proposed to increase the circle rate limit of 5% to 10%. At present, while taxing income from Capital gains, business profits and other sources in respect of transactions in real estate, if the consideration value is less than circle rate by more than 5%, the difference is counted as income both in the hands of the purchaser and the seller.
While the budget did not turn up any major announcements, it continued to focus on strengthening agriculture and rural economy, affordable housing and infrastructure development. It did evoke mixed reactions, but what remains to be seen is how the government would go on to implement the list of reforms and ideas that have been envisaged.