Flats in Mumbai to cost more with the new Budget: Experts
With the introduction of Union Budget 2013, experts have claimed that the incentives will be of no use for home buyers in Mumbai.
The real estate incentives are also claimed to create some problems with the buyers as the flats will cost more due to 1% tax on transfer of properties in Mumbai.
To make things worse, Budget 2013 also states that the service tax on sale of houses costing above Rs.1 crore will increase.
As per developers and home buyers in the city, giving incentives like deduction in tax on home loan will not help them as the rates of properties in Mumbai are sky high and 1% tax on transfer of property could further increase cost of properties.
Indian Merchants Chamber (real estate committee) feels that there is no vision for real estate in this budget. The relief that was expected in service tax or interest rates has been overlooked completely.
The major problem now is levying of tax deducted at source (TDS) of 1% on properties worth above Rs.50 lakh. As per a developer, even a basic 1 BHK flat in distant suburbs of Mumbai costs a fortune (more than Rs 50 lakh), and hence most come under this net.
This means that a buyer has to pay around Rs 60,000- Rs 70,000 while purchasing a 1 BHK flat of worth Rs 60-70 lakh. A 2 BHK flat costs Rs. 1 crore or more, which means buyers would end up paying more than Rs. 1 lakh in terms of taxes.
According to Cushman and Wakefield, a real estate consultancy firm, with such steps in place, price appreciation is the only option which will be a burden again for the buyers. Sellers would pass on the burden to the buyers and properties would become costlier.
The builders claim that the finance minister had a chance to revive the real estate sector which is already in a dooming state by announcing favourable incentives, but failed to do so.
First time in the last 3-4 years, this year, the average price of residential properties in Mumbai and the Mumbai Metropolitan Region (MMR) has gone down by around 1% in the last quarter.
However, the reverse has been seen for other metros like Pune, Bangalore, Hyderabad, Chennai, Delhi with weighted average prices on the upswing for the same period.
This was a good sign for home buyers as the average per-square-foot rate in the metro region is Rs 11,295 while the average cost of a flat is down to Rs 1.17 crore.
Also, 11,000 new residential projects approximately were launched last year which led to more pile up and decline in upswing prices. Furthermore, the developers are already facing a liquidity crunch.
Related Real Estate News:
Hike exemption limit on interest of home loan: Builders’s Association
Developers present wishlist for upcoming Union Budget
Property prices in Mumbai down by 1%
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