Post budget reactions from industry stalwarts of varied verticals

Neelesh Talathi, CFO, Pepperfry-

“Indian furniture market is large at INR 2.7 lakh crores and fast growing. Furniture is predominantly manufactured by MSME and we have been a proponent of measures to improve the overall competitiveness of this sector. We expect the furniture industry to get a boost with the announcement of the various tax proposals in housing and real estate segment.”

Interim Budget for long term sustenance -KE Ranganathan, Managing Director, Roca Bathroom Products Pvt Ltd-

“Full credit goes to the government for sustaining and setting the direction for growth. Many good measures have been taken to drive savings and investments. Direct tax reforms will encourage more compliance.  Incentive on capital gain & affordable housing will drive demand in real estate sector. Focused attention on farmers through better subsidy will help agri sector. Long term initiatives on infrastructure and digital India is a clear message to sustain GDP growth.

Interest relief on MSME sector will surely help to revive their business. Agriculture got its due in the form of interest Submention, Kamadhenu Ayog, Manrega allocation and subsidy to farmers.  Overall the interim budget set the tone for sustaining GDP growth and making the economy much stronger.

Wish the government consider the crying need to bring down the GST rates for sanitation products given compelling need to make India “ODF (open defecation free).”

Sangeeta Prasad, MD & CEO, Mahindra Lifespace Developers Ltd.-

“We welcome the government’s focus on growth via Union Budget 2019-20, which meets multiples objectives including boosting consumption, strengthening the agriculture sector and reducing the urban-rural gap through infrastructure.  The progressive budget places strong emphasis on affordable housing by granting a year’s extension on benefits under Section 80 – IBA, to housing projects approved till March 31, 2020, and can be termed as a game changer both for the unorganised sector and middle-income segment.  The exemption on notional rental income from second self-occupied homes is an enabler to bolster home buying.  The rollover of capital gains tax on the sale of houses has been increased from 1 to 2 houses and thus incentivises homebuyers and investors.  Finally, tax rebate on income up to INR 6.5 lakhs under 80C will accelerate investment in housing.”

Manas Mehrotra, Chairman, Incubex NestaVera –

“We welcome the budget for ushering in policies that will help in the growth of the overall economy. While the government has been positive on a macro vision for the rural economy, some measures could have been taken to bolster the co-working sector specifically and smart cites.

There have been no measures around GST and taxation in Budget 2019 to help co-working firms. Input tax credit under GST is an important issue that concerns the sector. The government has not enabled co-working firms to claim input credits on work contract and construction services supplied, as detailed under GST provisions. This would have checked the increased outflow of cash that co-working firms are currently experiencing. Co-working firms were also hoping that input tax credit under GST be extended to developers so that it could have been passed on to companies who lease out space and thereby reduce their overall costs.

Coworking firms were expecting that the government would curb or altogether eliminate Angel tax this Union budget as it would enable the firms to lease more spaces for start-ups, enterprises, MSMEs and entrepreneurs. Angel tax would hurt the start-up edifice and indirectly co-working firms would desist from leasing co-work spaces. Angel funding is now being considered as income and is being taxed at the full income tax rate of 30 per cent. This will detract higher investment in co-working spaces.

Co-working has become a thriving ground for start-ups. While the government announced that India is the second largest start-up hub in the world, there were no announcements to incentivise start-ups. Also considering that startups do not earn the profit in their initial business years, we were expecting that the government could have lowered the income tax slabs for startup employees which would have supported startups to reduce costs. Hence, we were expecting some important tax exemptions that would have given an enhancement to all existing and upcoming startups as this would have increased demand for co working spaces.

Companies may find it difficult to work without improvement in infrastructure to expand in metros and make a move into Tier II and Tier III cities too.  Co-work firms were also hoping that bank funding for start-ups would have been enhanced to make available greater access to financial resources to start-ups. There was no announcement in this regard.”

Aloke Bajpai, CEO & co-founder, ixigo –                                             

“Tax breaks for the middle class will result in increased disposable income triggering an increase in travel and tourism spends. The proposed INR 1448 crore for tourism infrastructure development will propel India’s growth impetus as the fastest growing travel market in the world. Allocation of these funds towards improvement of railway networks, roads and tourist destinations will help increase the economy driven by tourism. However the budget should have also addressed stronger short term initiatives to tackle the increasing air pollution problem faced by the national capital, which has had a drastic negative effect on foreign tourist inflow last year.”

A bold and favourable budget for real estate sector- Madhusudhan G., Chairman and MD, Sumadhura Group-

On many fronts this is a favourable and bold budget for the real estate industry. Though many of the expectations, whether it is bringing in a structured single-window clearance or granting infrastructure status to the industry didn’t materialize, however the government’s stance towards reducing the GST burden on homebuyers is seen as a welcome move.  In its ambitious quest to become a 5 trillion economy in the next five years, the interim budget, viewed as ‘Vision 2030’, has struck the right chord on several fronts, whether it is building next-gen infrastructure or building stronger digital India.

Steps taken and the impact on the real estate industry, as I see it:

  • The step of making more homes available under affordable housing is in-line with government’s vision of ‘housing for all’.
  • Giving impetus to the real estate sector, by extending the period of exemption from levy of tax on notional rent, on unsold inventories, from one year to two years, from the end of the year in which the project is completed is a slight relief to the developer community.
  • The proposed step to exempt levy of income tax on notional rent on a second self-occupied house is well addressed.
  • Steps which include rollover of capital gains tax on the sale of houses from one to two houses & full tax rebate for individual taxpayers having taxable annual income up to INR 5 lakhs is definitely a bold move and a great relief to the Indian salaried class.

Budget 2019: Impetus to Affordable Housing- Sankey Prasad, Chairman and Managing Director, Synergy Property Development Services –

“While the industry laid down a lot of expectations from the interim budget, for instance, aspects such as according Infrastructure status to the industry, and structured single-window clearance among others, which weren’t met, the budget in its entirety took into account a host of other issues aimed to propel the economy into a 10 trillion dollar economy, which is a positive sign.

The steps taken could percolate into direct & indirect benefits to the housing sector.  The impetus on affordable housing was once again visible.  I believe the proposal to extend Income Tax benefits for affordable housing schemes coupled with doubling NIL Income Tax slab from 2.5 to 5 lakhs will definitely be an impetus to the affordable housing sector. Also, exemption of tax on notional rent, on unsold inventories up to 2 years would provide relief to the Developers on the short term and help focus on newer projects.”

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