Budget 2021 focus on Affordable Housing segment; Housing for All target likely to be met: Niranjan Hiranandani

Dr. Niranjan Hiranandani, Founder and Managing Director, Hiranandani Group and President, NAREDCO, talks about the budget, dividend income of REIT/InvIT and budgets impact on real estate sector among others during an interview with Anil Singhvi, Managing Editor, Zee Business. Edited Excerpts:

Q: The finance minister has not said a lot on the real estate sector. Are you disappointed with it or you are okay as there is nothing negative that can have an impact on the sector?

A: She has continued with one thing and that is the benefits of the affordable segment that is about the tax-free nature of the affordable housing, which has been increased by one more year. Secondly, she has also continued with the Rs 1.5 lakh of interest deduction that was for affordable housing and PMAY scheme. So, she has put a lot of emphasis on the affordable housing segment and is continuing with the benefits that were provided to them. If you add them then GST stands at just 1% under PMAY and the stamp duty for affordable housing schemes in Maharashtra is just Rs 1,000. So, the stamp duty benefit provided by the Maharashtra government stands at 3% for regular housing but remains at just Rs 1,000 in the case of affordable. So, I feel, the benefits of these decisions will continue for around 60% of the housing schemes that are running across the country. Interestingly, the Prime Minister's target of providing 1.2 crore houses by 2022 under Housing for All will be achieved. So, the affordable housing that was expected by the government and the Housing Ministry will happen and they have focused on it. But there are other schemes, where we were asking to increase the deductions from Rs 2 lakhs to Rs 5 lakhs has not been done and I think the benefits of Section 43 CA is not available, therefore there is some heartburn.

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Q: Budget 2021 proposes to do away the double taxation on dividend income of REIT/InvIT. Do you think that this will benefit you? 

A: It will happen because the valuation of the InvITs will increase and whoever invests will not be taxed. So, I feel that this both, REITs & InvITs, will be benefitted. And this year, you will see that a lot of new investments will come in REITs and InvITs.

Q: How is the budget for the real estate sector and you, i.e. good, bad or neutral?

A: I feel, the budget is good. There are different segments in the housing sector, and you will see that they have focused a lot on the affordable segment, and I believe the segment will grow. Therefore, they have focused on what the Prime Minister and the Housing Minister were talking about. Rest is left for the states as the stamp duty and other things can be reduced at their level or in the GST council. But I am happy for a different reason and it is that the government's infrastructure is very strong at places, like metro, road, ports, disinvestment and health. If this infrastructure is seen, then I feel it has been increased a lot and will make a lot of difference. It will also benefit the housing segment, indirectly.