May 8, 2008

Post-budget analysis - Realty

Realty 8,718.69 +2.51%

May 02, 15:46

Post-budget analysis

Budget 2008-2009 was largely neutral for the Real estate sector. There was no direct benefit accrued to the sector. We continue to remain bullish on the real estate sector on back of demand growth mainly driven by large population, higher consumer spending, growing urbanization and availability of financing options.

Impact Table

Item Current Status Change in Budget Impact

Five year tax holiday for hotels (U/S 80 ID) 100% of profits is deducible for the 5 years commencing from initial assessment year in case of an undertaking engaged in hotel business (2,3,4 star category) located in National Capital Territory of Delhi and the districts of Faridabad, Gurgaon, Gautam Budh Nagar and Ghaziabad. Which is constructed and started or starts functioning between April 2007 to March 2010. Extended to World Heritage Sites. Which is constructed and started or starts functioning between April 2008 to March 2013. Positive: Real estate companies, who have plans to enter into hospitality space, are expected to benefit from this.

Steel Excise duty (CENVAT) in steel - 16%. Excise (CENVAT) in steel reduced from 16% to 14%. Positive: Reduction in excise duty on steel is expected to lower the cost of construction and hence can have a positive effect on the sector.

Source - SBICAP Securities Limited

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