Real Estate Investment Trusts (REITs) are likely to become a reality in India soon as the government moves to remove dividend distribution tax (DDT) on them. The realty sector has much to cheer about from the Union budget. Finance minister Arun Jaitley has removed the last significant tax hurdle in the way of Real Estate Investment Trusts (REIT), given incentives to first-time home buyers and tried to make affordable housing more viable. “From the speech of the finance minister, one of the most-awaited exemption of Dividend Distribution Tax on the dividend declared by the portfolio company to REIT and InvIT has been proposed. With this amendment, all the required fiscal support for REIT and InvIT to make it a reality has been done. This will support the developer and fund managers to raise funds through REIT/InvIT and create liquidity,”said Hemal Mehta, partner, Deloitte Haskins & Sells Llp. To fuel housing activity under the Pradhan Mantri Awas Yojna,through which the government has been trying to address the housing needs of the poor, Jaitley has proposed to give 100% deduction for profits to an undertaking from a housing project for flats up to 30sq.m. in four metro cities and 60sq.m. in other cities, approved between June 2016 to March 2019, and completed within three years of the approval. Minimum Alternate Tax (MAT) will, however, apply to these undertakings. It has also been proposed to exempt service tax on construction of affordable houses up to 60sq.m. under any scheme of the central or state government, including public-private partnership schemes. In Budget the annual housing rent reduction limit has been increased from Rs 24000 to Rs 60000 could lead to an almost immediate uplift for rental housing across the major cities. This can also potentially encourage the sentiment for home ownership in the long run," said Kishor Pate, CMD, Amit Enterprises Housing Ltd, reacting to the Budget. Also, first-time home buyers have been given the benefit of an additional deduction of Rs. 50000 on home loan interest for loans not exceeding Rs 35 lakh, where the value of the house is no more than Rs 50 lakh. This will result in improved home buying sentiment in smaller cities with lower housing costs. An improvement in sentiment will also be seen in the cheaper far suburbs of the metros. “Housing for all seemed to be the flavour of the real estate part of the budget presented on Monday. The direct and indirect tax benefits for affordable housing is expected to catapult the smart-city initiative. Additional deduction of interest would incentivise the first home buyers to own the houses,” said Bhairav Dalal, partner - tax, at consultancy PwC India.