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News & opinion

19 MAR 2019

Pre-budget predictions match budget announcements

Nimish Gupta FRICS

Nimish Gupta FRICS

Managing Director, South Asia

Gurgaon, India

RICS

Managing Director of RICS in South Asia Nimish Gupta FRICS gives his perspective on India's Interim Budget 2019 against RICS' pre-budget expectations.

The budget, with its impetus on affordable housing and tax sops, will provide a stimulus to the sector, which will help boost overall economic activity. It is heartening to see the continued focus on infrastructure development.

Overall perspective

Pre-budget expectations

  • A balanced budget was expected to provide adequate stimulus to key sectors to promote rental and low-cost/affordable housing mechanisms.

Post-budget announcement

  • It is heartening to see that the real estate sector will see the silver lining of the interim budget.

Rental housing

Pre-budget expectations

  • Lowering the tax rate on rental income along with taxing a much lower percentage of the rental income would help incentivise rental housing.

Post-budget announcement

  • No tax on notional rent on a second self-occupied house.
  • Tax deducted at source (TDS) threshold on rental income raised from INR 1.8 to INR 2.4 lakhs.
  • Tax on notional rent on unsold inventory to be levied after two years.

Affordable housing

Pre-budget expectations

  • This is the "need of the hour".
  • Must look at mechanisms to increase the supply of land — possibly through reverse tendering.

Post-budget announcement

  • A rollover of capital tax gains being extended to an investment in two residential houses for an individual with capital gains up to INR 2 crores.
  • Benefits under sector 801BA will be extended for one more year for all projects approved till 2019–20.

Goods and Services Tax (GST)

Pre-budget expectations

  • Should consider bringing stamp duty under GST ambit to reduce the tax burden on home buyers.

Post-budget announcement

  • The sector looks forward to the Union Budget, post-2019 general elections, given the intent of the government to reduce the incidence of GST on home buyers.
India Interim Budget 2019
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Nimish Gupta FRICS

Nimish Gupta FRICS

Managing Director, South Asia

Gurgaon, India

RICS

With over 22 years' experience in real estate, construction, education training and technology adoption, Nimish built up a career within the built environment sector after graduating as an engineer from the National Institute of Technology. He started work at Larsen & Toubro, the largest construction company in India, and has since held senior positions within high-profile real estate and construction organisations, such as Vipul Modern, a leading construction services provider, Laing O'Rourke, and Lendlease.

Nimish is a chartered surveyor himself and has been closely associated with RICS since 2005. He played an integral role in the formation of the vision, planning and implementation of RICS South Asia, and was among the first to qualify as an RICS Fellow in India.