The year 2020 introduced a slew of overwhelming changes for every one of us. Let’s see how the year turned out for real estate. Here, we look back at the year‘s regulatory policies and their impact on the real estate sector.
Surfing a wave of economic transformation and concurrent income growth, the Indian real estate sector has experienced a phase of unprecedented changes. Introducing regulatory policies and reforms have been at the core of the government’s agenda for real estate. There have been some breakthrough reforms in the past year that provided a vital stimulus to the real estate sector. We bring to you some top policy initiatives that made real estate one of the most talked-about sectors of the year 2020.
Regulatory Policy 2020: Tax Deduction Extended on Affordable Housing
To realise the goal of Housing for all by 2022, the Finance Minister announced a deduction of up to ₹1,50,000 for interest paid on loans for affordable housing. The deduction is applicable to housing loans sanctioned on or before 31st March 2020. Therefore, in order to ensure, a large number of people avail the benefit. the Ministry of Finance extended the timeline to March 2021. This resulted in the extension of the Tax Holiday by a year.
What is a Tax Holiday? Tax Holiday is a period of exemption from income tax for new companies or individuals. This relaxation encourages the development of domestic industries in the country.
Regulatory Policy 2020: Project Registration Extension Amid COVID-19
The outbreak of COVID-19 brought the world to a standstill. The Government introduced an extension for the RERA registration of projects after identifying the pandemic as a force majeure event. Around 20 states announced an extension of real estate projects by 6-9 months.
Outcome: Consequently, this provided the much-needed relief to developers grappling with a slowdown in sales and liquidity crisis aggravated by the migration of labourers and stalled construction projects.
Identification of COVID-19 as a Force Majeure in the Country The Central Government declared COVID-19 as an event of Force Majeure. The government issued an advisory to all State Governments, Union Territories, and their Real Estate Regulatory Authorities to extend the completion date by 6 months.
Measures Taken for Real Estate Under Atma Nirbhar Bharat
The government provided relief from penalties and a ₹30,000 Crore liquidity support in the cases of project delays induced by the COVID-19 pandemic. Apart from this, the middle-income group has been entitled to an extended Credit-linked Subsidy Scheme.
Outcome: A celebratory boost to the affordable housing segment of the country.
Regulatory Policy 2020: Home Loan Moratorium for Real Estate
The Reserve Bank of India had allowed Banks and other leading institutions a three-month Loan Moratorium on EMIs. Initially, valid for three months from March to May 2020, the Loan Moratorium was extended to August 2020. The move was expected to battle the economic fallout caused by the pandemic.
Outcome: A concrete support to borrowers and developers reeling under monetary pressure for a long time.
Regulatory Policies 2020: Concessional Tax for Cooperatives
The Finance Ministry proposed to reduce the tax of cooperative societies to 22 percent plus surcharge and cess from the current 30 percent. The concession in the tax rate was provided on a similar line of Taxation Laws Ordinance 2019 declared for domestic companies. The ministry proposed to exempt the cooperative societies from the Alternative Minimum Tax.
Outcome: An act of encouragement for the builders and a step to boost the affordable housing segment in the country.
Government’s Initiatives on Infrastructure Development
The government is all set with its plans to invest heavily in the infrastructure sector over the coming five years. As originally envisaged in the election manifesto, the government plans to invest ₹100 Lakh Crore for infrastructure development. The plan involves 600 projects across sectors of Safe Drinking Water, Housing, Access to Clean and Affordable Energy, Healthcare for All, Modern Railway Stations, Airports, Bus Terminals, World-class Educational Institutes, Metro and Railway Transportation, Warehousing, Logistics, Irrigation Projects, etc. The ministry had introduced the National Infrastructure Pipeline worth ₹103 Crore on December 31, 2019.
Outcome: Anticipating significant economic growth and overall progress of the country.
Also read: Construction premiums slashed to half in Maharashtra
