New Delhi: As the implications of the proposals unveiled in Union Budget 2007 sunk in, there was euphoria in the real estate industry. Industry leaders across the spectrum felt that the Budget has been good for the real estate this year.
In his Budget proposals, Finance Minister P Chidambaram retained the existing tax benefits and unveiled a mortgage guarantee mechanism to facilitate easier home loan deals.
"Banks and housing finance companies that lend against mortgages would have greater comfort if the mortgage can be guaranteed through a three-way contract among borrower, lender and guarantor. Regulations will be put in place to allow the creation of mortgage guarantee companies," he said.
The Finance Minister also proposed the introduction of a novel 'reverse mortgage' scheme for senior citizens through the National Housing Bank.
Under the scheme, a senior citizen who is the owner of a house can avail of a monthly stream of income against the mortgage of his/her house, while remaining the owner and occupying the house throughout his/her lifetime, without repayment or servicing of the loan.
The retention of the FTIB provision under Section 80(I) A for the real estate sector, too, has made real estate developers smile. "The Budget 2007 has been good for real estate since the FM has been kind enough to retain the provision of FTIB under Section 80(I) A," JC Sharma, MD of Shobha Developers, said.
"This means that real estate companies will be given same benefits which the infrastructure companies are permitted at this point of time. This was one of the key demands of real estate sector which has been suitably addressed. Going forward, we feel that with this benefit, there will be a continuous demand for houses as we move forward," he said.
The excise duty hike on high-end cement, however, came as a dampener. But industry leaders feel this increase can be absorbed by the users and it will not have any impact either on inflation or real estate companies.
However, the proposal to bring renting of immovable property for use in commerce or business under the service tax net was a bit of a bad news, industry leaders feel.
Comments
0 comment