To Achieve “Housing For All by 2022” industry requires Tax Holidays

Accommodation Times News Services

sanjaychaturvediBy Dr Sanjay Chaturvedi, LLB (Gen), PhD.
Real Estate transactions are heavily taxed. We know that builder pass on VAT on customers. Service Tax, as applicable, has to be paid by the customers. Development Cess / Tax, Capital Gain Tax, Property Tax, Stamp Duty, Registration charges, Transfer fees if applicable. Besides these taxes, one has to pay maintenance and interest on home loans.
How a ordinary middle class or poor class going to afford a house in metros? Even if housing agencies like MHADA, DDA, HUDA or GUDA going to give affordable and cheap housing options but one cannot purchase these without Housing Finance or such taxes.
Tax incentives were introduced under 80IB for builders developing affordable housing. But the advantage never been passed to actual property purchasers.
Its high time that Tax regime must put a stop on exploitation from the need based industry, Real Estate.  Only 70.6 per cent of urban population has access to individual water taps, about 81 per cent of urban households have access to any form of latrine facility, 71 per cent of urban households have a drinking water facility within their premises, and only 62 per cent of waste is treated before disposal. Urban transportation problems are similarly acute; public transportation is congested and inefficient. Housing too is problematic, with almost 25 per cent of the urban population of India living in slums. In spite of such grave exponential problems, government after government declares targets which are far from achievable without any execution plan.
According to Bahl and Martinez-Vazquez, 2008, only Property tax constitute 3.4% of GDP in year 2000. It has increased many fold. Governments are keen on exploitation of real estate further by way of auctioning land to private developers on a unreasonably high price and huge premium on FSI. TDR being the obligatory to be received, government wants its share on TDR portion too and have imposed 33% reservation on a premium to be taken from Govt which distructs the very concept of TDR. Actually its not TDR, its FSI purchased from state government on premium that too decided by government. The ultimate cost comes to property purchaser.
Why do highest portion of black money expected to be there in real estate transaction? An honest citizen wants to pay taxes but reaching this almost 50% by all means. Taxes are revenues for government but need based industry must be given some relief. A homeless person needs home. Government must enhance his affordability by way of giving him opportunity of employment and as well as giving incentives to purchase home. A draconian tax regime and looting intention will never make “Housing For All by 2022” a success. Tax reforms on real estate transaction is need of the hour if we want to achieve our objectives of Housing for all. Tax holidays for next ten years is the only answer.

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