India: FM Adds Diwali Sparkle to Real Estate with Big Bang Announcements

Giving a major boost to residential real demand amidst the ongoing festivities, the FM today announced income tax relief for developers and homebuyers.

The increase in the differential between circle rates and agreement value - from 10% to 20% (under Section 43CA) – is indeed a good move.

This limited-period offer (up to 30 June 2021) 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 INR 1.5 Crore while another 49,290 units priced between INR 1.5 Cr to INR 2.5 Cr.

The additional outlay of INR 18,000 crore for PM Awas Yojana (PMAY – Urban) is another welcome step towards fulfilling its vision of Housing for All by 2022.

The additional outlay is over and above INR 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.

Five years after the implementation of this ambitious scheme, Pradhan Mantri Awas Yojana (Urban) has made steady progress across states.

As of August 2020, a total of 1.06 crore homes had already been sanctioned in the country, of which 33% or approx. 35.18 lakh homes are completed while another 66.23 lakh units have been grounded for construction.