Affordable housing
dates back to 2007 but the real estate sector has faced various challenges such
as lack of land, cascading taxes and lack of incentives has kept developers and
buyers away. The government has granted much coveted infrastructure status
towards affordable housing allowing developers to have access to cheaper
sources of funding including external commercial borrowings.
Here’s Ashish Sharma CEO of LiveUp Solutions Sharing his Expert
opinion below
”My government will
also establish a dedicated Affordable Housing Fund (AHF) in the National
Housing Bank, funded from priority sector lending shortfall and fully serviced
bonds authorized by the government of India,"
This was the Statement Made by the Union Financial minister
Arun Jaitley while presenting the Union Budget of 2018-19. The government has
taken certain steps to boost real estate sector in India. With the launch of
PMAY( Pradhaan mantri Awaas Yojana) Scheme in 2015 to Provide housing for all
by 2022, with more than one crore houses being built in rural areas in addition
to this the government has recommended the effective GST rate of 8% for houses
under this scheme that Provides CLSS (Credit linked subsidy system.
However the houses under construction will attract 12% GST
(With the provision of deducting 1/3rd of the house price towards
cost of land which will effective rate comes down to 12%.This will now be down
by 4% which will reduce the tax rate to 8% for affordable homes).
During the initial lunch of PMAY scheme in 2015 interest
subvention of 6.5% was provided for a loan of Rs 600000 for the economically
weaker section (EWS) and Lower income Groups (LIG) until 2022.
A Statement by CBEC said that “one of the important
recommendations is to extend the concessional rate of GST By 12%. The lowering
of GST rates will likely aid the buyers and can subsequently avail interest
subsidy under this scheme.
Currently assistance has been approved to construct 37lakh
houses in urban areas.
This is expected to strengthen the affordable housing sector
and will pave way towards better access to capital in related areas of
development in urban and semi urban areas.
This move by the government would act as a relief for
homebuyers which are uniquely targeted towards class of citizens based on their
income criteria.
The promoters have been granted more time for project
completion and have extended the deadline from 3 years to 5 years.
Government policies like RERA (Real estate regulation Act
2016) which aims to protect the interest of buyers by making real estate
transactions transparent the market is expected to see an upswing in demand in
the real estate sector this has enabled first time home buyers to make purchase
decisions to buy a new home.
For homes under construction 18% GST Rate(Current)
·
12% effective GST Rate
·
*effective rate is calculated after
deducting 1/3rd of the house cost towards cost of land.
GST
Rate proposed for affordable Homes
·
12% GST Rate
·
12% Effective GST Rate
*effective rate is calculated after
deducting 1/3rd of the house cost towards cost of land.
Affordable
housing is the launch pad of India’s real estate movement in India with a
shortage of 1.9 crore units in India the government has found the need to fill
the gap in making housing affordable in urban and semi urban areas. With 1.3
billion people in India moving in to purchase properties this is expected to
bring in a wave of investments of $13. Trillion in housing sector over the next
5-7 years. This is indeed a silver lining for buyers and developers in the
affordable housing segment in India.
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