Budget 2014: FDI, tax sops for REITs to boost Realty
The 2014 Budget proposals to allow FDI in the housing sector and tax incentives for REITs (Real Estate Investment Trusts) was welcomed with much joy by realty experts. They believe that by doing so, the chances for creating affordable housing will increase, and help improve investment flows.
Announced by Finance Minister Arun Jaitley, the Budget emphasized on FDI in the realty sector. Industry experts say that apart from creating affordable housing, the new Budget will also help alleviate liquidity requirements for developers. The introduction of REITs will provide a multitude of opportunities for developers, private funds, financial institutions, and other investors as they can then rotate the funds as per requirement.
The Finance Minister has also made proposals to provide incentives, including a tax pass-through status, which would reduce the effects of double taxation, for the introduction of REITs. Granting a pass-through status for taxation is an essential step for the successful implementation of REITs.
To encourage the development of smart cities, there has been a reduction in requirements for the built-up area and capital conditions for FDI, going from 50,000 sq m to 20,000 sq m and $10 million to $5 million respectively. “This will allow smaller developers with good track records better access to FDI and hence, boost affordable housing,” Colliers International Associate Director, Surabhi Arora said.
“REITs can solve several ongoing concerns that are a hindrance to the growth of the economy, relating to transparency, credit crunch, organization of the property market sector, liquidity of real estate assets and execution of property developments across the country, which would help build infrastructure,” she added.
Source: The Economic Times
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