By Accommodation Times News Services
From tomorrow Budget session is commencing in Lok Sabha, the real estate industry is looking up for budget with a hope that there will be a flip in the market, if the Uniopn Budget 2016-17 remains positive for the realty sector. The industry experts have high expectations form the government as real estate market is down.
Dividend Distribution tax (DDT) has remained the biggest bottleneck in REITs, industry hopes to get rid of it. “Removal of dividend distribution tax in real estate investment trusts (REITs) is another major demand from the realtors. Despite the announcement last year, there has not been a single REIT listing in India till date because of Tax leakage. Government should support the sector with tax breaks and additional incentives to spur sales which is the key problem today. The government should increase the tax deduction limit for housing loans, especially for buyers in metropolitan cities. The current limit of Rs. 2 lakh is insignificant given the ticket sizes in cities like Mumbai. Government needs to bring in control and stabilize raw material prices and various taxes 9-10% cost (direct/indirect) as they have a direct impact on final price of the product. Certain measures stimulus cum incentive should be provided to make the housing for all mission a reality,” said Mr. Navin Makhija, Managing Director, The Wadhwa Group.
Like government developers also intent to develop affordable homes for buyers, but developers are looking for some tax reforms and reduction in it to support the mission. “The Housing For All by 2022 is a major mission of this government and to achieve the goals under this mission, only way forward is massive program to construct affordable housing. In order to reduce finance cost FM can take measures such as increasing banks’ exposure to real estate sector by 8 to 10 times from present level. Considering the issue of Non Performing Assets (NPA) which is haunting the banking sector currently, real estate is the best bet as the NPAs from real estate sector are just 2%, said, Mr. Mayur Shah, Managing Director, Marathon Group.
He further added, “FM must focus granting infrastructure status to housing sector and also include lending to affordable housing in priority sector lending which will bring down cost of financing affordable housing projects. To make affordable housing attractive for developers, tax holiday under section 80 IB for affordable housing projects should be reintroduced, remove tax on inventory under section 43 CA. It can also increase tax benefit on interest on housing loan to Rs. 4 lakh taking into consideration realities of prices in tier I cities and introduce flexible repayment schemes to incentivize more and more young working population to own their homes. Also, single window clearance scheme for real estate projects is one of the announcement developers have been waiting for since a long time.”
Another leading developer from Pune Mr. Rohit Gera, MD, Gera Developments & VP, CREDAI – Pune, said, “Currently, industry’s expectation is reduction in interest rates and property prices from buyer’s perspective. The government can introduce special residential zones on the lines of Special Economic Zones (SEZ) for projects where there is a certain minimum scale and the homes are off a certain maximum size or price. The expectations are that the Finance Minister embarks upon the reduction of Corporate Income Tax as promised in the last budget. However, the government should be inclined to boost the housing sector which is strongly connected with the growth of the entire economy. Some of these measures can be like, introduction of special residential zone. Permit higher level of deduction of interest for home buyers, say of 200% of the interest paid in the first year and taper this down over a period of 5 years. This time bound step down route would move people to purchase the existing ready inventory and thereby improve liquidity for developers and simultaneously boost revenue for the government.”