Finance Minister Nirmala Sitharaman on Monday proposed more than doubling of healthcare spending while imposing a new agri cess on certain imported goods and raising customs duty on items ranging from cotton to electronics in a bid to pull the economy out of the trough.
Here are the highlights from Nirmala Sitharaman's Budget 2021 proposals for the real estate sector:
1. Extension of additional tax deduction of Rs 1.5 lakh on interest paid on housing loan for purchase of affordable homes by one more year to March 31, 2022. The move is aimed at boosting demand in the sluggish real estate sector and applies for those buying homes for the first time and of up to Rs 45 lakh. The additional deduction shall be available for loans taken up till March 31, 2022.
2. Permitting foreign portfolio investors an entry into debt financing of emerging investment vehicles - REITs and InvITs. While a REIT (Real Estate Investment Trust) comprises a portfolio of commercial real assets, a major portion of which are already leased out, InvIT (Infrastructure Investment Trust) comprises a portfolio of infrastructure assets such as highways and power transmission assets. Also proposed exempt taxes on dividends on REITs and InvITs.This in turn will ease access of finance to InvITs and REITs, thus augmenting funds for infrastructure and real estate sectors.
3. 'Zero Coupon Bond' push announced for infrastructure. Government will notify Infrastructure Debt Funds eligible to raise funds by issuing tax efficient "zero coupon bonds". A zero-coupon bond is a debt security that does not have to pay interest but instead trades at a deep discount, rendering a profit at maturity, when the bond is redeemed for its full face value.
4. National Infrastructure Pipeline (NIP) now expanded to 7,400 projects.
5. Setting up of a Development Financial Institution to act as a provider, enabler and catalyst for infrastructure financing. "Accordingly, I shall introduce a Bill to set up a DFI. I have provided a sum of Rs 20,000 crore to capitalise this institution. The ambition is to have a lending portfolio of at least Rs 5 lakh crore for this DFI in three years time," said Sitharaman.
6. Proposal to increase safe harbour limit from 10% to 20% for the specified primary sale of residential units, in order to incentivise home buyers and real estate developers.