Highlights of India's Union Budget for 2008/09 - What it means for Real Estate?

THE ECONOMY

• Total plan spending in 2008/09 seen at 2.4 trillion rupees ($60.3 billion). Non-plan spending seen at 5.07 trillion rupees.
• Government to waive debts of small farmers. The total cost of the farm debt waiver scheme will be 600 billion rupees.
• Fiscal deficit in 2008/09 seen at 2.5 percent of GDP compared to 3.1 percent of GDP in the previous year.
• Revenue deficit seen at 1 percent of GDP in 2008/09 compared to 1.4 percent of GDP the previous year.
  

• Government confident of GDP growth of 8.8 percent in 2007/08.
  
  

INVESTMENT, INFRASTRUCTURE, INDUSTRY AND TRADE

• Saving rate and investment rate estimated to be 35.6 per cent and 36.3 per cent,
  respectively, by the end of 2007-08; between April- December 2007-2008. FDI
  amounted to US$ 12.7 billion and FII to US$ 18 billion
  

RURAL INFRASTRUCTURE DEVELOPMENT FUND

• Corpus of RIDF-XIV to be raised in 2008-09 to Rs.14,000 crore, with a separate
  window for rural roads.
  
  

ROADS

• National Highway Development Programme (NHDP): Allocation for NHDP enhanced to Rs.12,966 crore in 2008-09 from Rs.10,867 crore in 2007-08; Completion rate in the Golden Quadrilateral is 96.48 per cent and in the North South, East West Corridor project is 23.36 per cent; Special attention being paid to SARDP-NE; programme devised for the North Eastern region; 180 kms of roads completed in 2007-08 and 300 kms. of road targetted for completion in 2008-09.
  
  

HOUSING FOR THE POOR

• Subsidy per unit in respect of new houses sanctioned after April 1, 2008 to be enhanced from Rs.25,000 to Rs.35,000 in plain areas and from Rs.27,500 to Rs.38,500 in hill/difficult areas to reflect the higher cost of construction;
  

• Subsidy for upgradation of houses to be increased from Rs.12,500 per unit to Rs.15,000;
  

• Public sector banks to be advised to include IAY(Indira Vikas Yojna) houses under the differential rate of interest (DRI) scheme and lend up to Rs.20,000 per unit at an interest rate of 4 per cent.
  

BUDGET ESTIMATES

• Plan Expenditure estimated at Rs.243,386 crore.
  

• Non-Plan Expenditure estimated at Rs.507,499 crore.
  

• Urban infrastructure spending to rise to 68.7 billion rupees.
  

• Rural infrastructure spending will be 140 billion rupees.
  

• Government spending on national highways will be 130 billion rupees.
  
  

TAX PERSPECTIVE

• Income tax threshold raised to 150,000 rupees.

• Tax to GDP ratio in 2007/08 seen at 12.5
  

• Government proposes increasing short-term capital gains tax to 15 percent and a commodity transaction tax for futures.

• Government proposes to withdraw banking transaction tax from April 2009.

• No change to corporate tax rates.
  

• Service Tax - Four services brought under service tax net namely, asset management service provided under ULIP, services provided by stock/commodity exchanges and clearing houses; right to use goods, in cases where VAT is not payable; and customised
  software, to bring it on par with packaged software and other IT services.
  

• Five year holiday from income tax being granted to two, three or four star hotels
  established in specified districts having UNESCO-declared 'World Heritage Sites';
  the hotel should be constructed and start functioning during the period
  April 1, 2008 to March 31, 2013.
  

• Five-year tax holiday for hospitals.
  

• Excise duty rates on bulk cement and packaged cement brought on par.
  
  

SOURCE : http://indiabudget.nic.in

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Contributed By : Minal Arora