A brief note on the Union Budget(2017-18) proposals having impact on the real estate sector

1. How will Budget 2017-18 impact real estate sector?
The real estate sector, which was hit by the government’s demonetisation drive, got the much needed
boost in the Union Budget 2017-18. Here are some of the key highlights pertaining to the real estate
sector and their impact.
Real
Estate
Sector
Infra Status
Loan
refinance
Tax
exemption for
Notional
Rental Income
Capital Gains
on JDA
Reduction in
Holding
Period
Change in
Base Year
PMAY
Increase in
size of
affordable
housing
Service Tax
UNION BUDGET 2017-18
Impact on Real Estate Sector
2/19, Nityanand Nagar, Sahar Road, Andheri
(East), Mumbai-400 069.
10/02/2017

2. Union Budget 2017-18 Impact on Real Estate Sector
Right advice at right time...
Address: 2/19, Nityapriya, Nityanand Nagar, Sahar Road, Andheri (East), Mumbai – 400 069. Page 1 of 4
Tel: +91 22 26836519; Email: info@gscintime.com
How will Budget 2017-18 impact real estate sector?
The real estate sector, which was hit by the government’s demonetisation drive, got the much needed
boost in the Union Budget 2017-18. Here are some of the key highlights pertaining to the real estate
sector and their impact.
Infra status
With the real estate sector hoping for a push from the Union Budget 2017-18, the announcement of
‘infrastructure status’ to the affordable housing sector, can serve as a significant step in achieving the
government’s ‘Housing for All’ mission. Infrastructure status will enable developers operating in this
segment to raise loans at a cheaper rate, akin to other infrastructure projects. With industry status,
banks will be willing to lend more to projects in the affordable housing segment and thus create larger
access to funds. Giving an infrastructure tag to such projects would attract more investors.
Real
Estate
Sector
Infra Status
Loan
refinance
Tax
exemption for
Notional
Rental Income
Capital Gains
on JDA
Reduction in
Holding
Period
Change in
Base Year
PMAY
Increase in
size of
affordable
housing
Service Tax

3. Union Budget 2017-18 Impact on Real Estate Sector
Right advice at right time...
Address: 2/19, Nityapriya, Nityanand Nagar, Sahar Road, Andheri (East), Mumbai – 400 069. Page 2 of 4
Tel: +91 22 26836519; Email: info@gscintime.com
Loan refinance
National Housing Bank will refinance individual loans worth Rs 20,000 crore in 2017-18. This will give
a major push to affordable housing companies.
Tax exemption for notional rental income
Today most developers are stressed and the market
has been going slow. In the last nine quarters
residential unsold inventory has gone up by 40%. The
Government has proposed 1 year tax exemption
from notional rental income from unsold inventory.
This would help especially those holding real estate
inventory/ stock in the residential sector.
Capital gains on JDA
Capital gains on Joint Development Agreement are to be taxed only when the project is completed.
This would provide a great boost to unlocking land for development and reduce litigation. Deferring
payment of capital gains tax in joint development till the project is completed will help reduce cash
flow of the project. Earlier the land holder had to evaluate the price of the land held while entering
into an agreement with the builder and pay the tax on the notional gains. Now this payment will be
deferred. This will encourage land owners to enter into development agreements with realtors and
eventually lead to an increase in supply of properties. This will encourage more joint development
across the country.
Reduction in holding period
In case of Long term Capital Gains from Immovable properties, the holding period has been reduced
from 3 years to 2 years to qualify for benefits of long term capital gains providing respite to investors.

4. Union Budget 2017-18 Impact on Real Estate Sector
Right advice at right time...
Address: 2/19, Nityapriya, Nityanand Nagar, Sahar Road, Andheri (East), Mumbai – 400 069. Page 3 of 4
Tel: +91 22 26836519; Email: info@gscintime.com
Base year change
The base year for calculation of Indexation for long term capital gain shifted from 1981 to 2001. As a
result of this resultant gain would reduce & in turn lower taxation.
PMAY get huge boost
The Government has allocated Rs 23,000 crore
for the Pradhan Mantri Awas Yojna (PMAY) to
complete one crore houses by 2019 for those
living in kachha houses.
Increase in size of affordable housing
In the last budget, the government provided 100% tax exemption on profits, for developers building
homes with Built up area up to 30 sq meters in the four metros and up to 60 sq meters in other cities.
The Government stated that instead of built up area, carpet area would be applicable.
Valuation under Service Tax
Valuation Rules provided for deduction of value of materials used in providing works contract service
but didn’t provided for deduction for value land. Now, a retrospective amendment has been provided
in Valuation Rules for deduction in value of land or undivided share of land charged. Also, the
abatement rates which were prescribed under the Abatement Notification are introduced under the
valuation Rules for valuing works contract services inclusive of value of land.

5. Union Budget 2017-18 Impact on Real Estate Sector
Right advice at right time...
Address: 2/19, Nityapriya, Nityanand Nagar, Sahar Road, Andheri (East), Mumbai – 400 069. Page 4 of 4
Tel: +91 22 26836519; Email: info@gscintime.com
2/19 Nityanand Nagar, Sahar Road, Andheri (East), Mumbai-400 069.
+91 22 2683 6519
info@gscintime.com
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