Real Estate Market Seek Relaxation on Budget 2014

Bangalore : The Real estate stake holders are waiting promptly for the Union Budget 2014-15. The newly elected government will present its first Union Budget on July 10. This will be the first Budget of the new Government and hence brings a lot of expectations along with it. With the hope that the first Union Budget of Narendra modi will give great relief from hurdles for real estate players and this brings clarity on investment norms for private equity investors.There are some important announcements that the real estate industry seekers and sector in general are looking forward to in the coming Union Budge 2014-15. The most individual investor expectations are revolving around their basic needs such as inflation, increasing prices of essential goods, Stamp duty, tax sops, Housing Finance and Jobs and Housing.
The Real estate sector has a potential to generate a lot of employment opportunities. However it is a capital intensive sector. The Real estate industries are facing many challenges such as approvals are needed from government, availability of skilled labors, Funds etc...

Infra structure development :This development is one of the major expectations from new government union budget. The PM, Narendra Modi stated clearly in his speech that Infrastructure development is one of the top items on government agenda. This Infrastructure development scheme includes Railways, road ways, flyovers etc.. This will reduce some development costs of real estate projects which are well connected to major city hubs.Reduce in interest rates: The rising inflation rate is one of the major problems for middle income segment. The high prices of essential properties are coupled with high interest rates and reduced the affordability. There are high expectations in the coming union budget 2014 to curb the price rates and cut the interest rates with the help of reserve Bank of India (RBI). Reduce in interest rates will improve real estate market as well as affordability.
Tax rebate: According to present tax structure an individual can avail tax rebate up to Rs 1.50 lakhs from taxable income. Also, individual can claim tax exemption up to Rs 1 Lakh under 80C Section against principal repaid. Here, there is an expectation of increase in limit of income tax and higher cap of income tax exemption on home loan interest payments. This will generate a high demand in the Real estate market and also improves affordability.

Approval of Pending policies: Present, the Real estate sector is unable to attract the investors due to some pending policies. Some of the major policies include easing the foreign Direct Investment regulation and Real Estate Investment Trusts (REITs) can be the real estate instruments that can channel investor money into real estate market. This REITs will provide new funding options which help to reduce the dependency on the banking system.

Reduction in Stamp duty: Reduction in Stamp duty on property transaction is another expectation of the Budget 2014. This helps to increase the level of government Revenue. Reduction of stamp rate on registration and transfer of property will increase the revenue stream of the Government. Because of incentive decrease of under value property by buyers.