Realty sector pins hopes on budget

In the run-up to the Union Budget next month, the real estate industry is hoping the sector will finally get its due, with simplified taxes, subsidised home loan, and much more.

Anuj Puri, Chairman and Country Head, Jones Lang LaSalle India says, "The Union Budget rolls around every year, and every year it presents the Government with an opportunity to iron out the more glaring inconsistencies and introduce the most obviously called-for reforms, and thereby either consolidate or strengthen its stance as a champion of economic growth and progress." He adds, "Special Residential Zones (SRZs) should finally be implemented, and developers who focus on ultra-lowcost housing, either through SRZs or otherwise, should be given more sops."

Lalit Kumar Jain, Vice-President, CREDAI, says, "The government will have to go out of the way to accelerate housing stock. The low-income group housing is defined as accommodation up to 80 sq metres. The government should create a scheme where such notified projects with tenements up to 80 sq mtrs will have 90 to 100 per cent tax concession from the current levels. There should be deduction under Section 35AD of the Income Tax Act for investments in affordable housing."

Home loans are a concern for every homebuyer and industry experts are hoping for subsidised loan rates for the buyer. Jain says, "The government should grant subsidised interest rates for the first-time homebuyer and additional Rs 1 lakh for homebuyers under Section 80C." Puri suggests, "Last year, housing loans under Rs 10 lakhs were given an interest rate cut of one percent. We need similar measures in this budget."

The realty sector points out that the government should simplify tax procedures. Puri feels the Government should introduce Goods and Services Tax (GST) and include the real estate sector under the ambit of this single tax regime. "This will simplify transaction costs like stamp duty and give developers a set-off or credit on the taxes paid on construction material and services. Also, create a nationwide, unified taxation system, which currently differs between States."

Jain says, "After the national housing policy was announced, the government brought the scheme under Section 80IB of the Income Tax Act. This was very effective and housing stock multiplied. Also, black money was substantially reduced in the real estate sector due to provisions of Sections 80IA and 80IB."

Apart from simplifying tax procedures, experts feel the government should give rebates. Jain feels, "The issue is that 30 to 36 per cent of sale value are taxes (excise, VAT, service tax, stamp duty etc). The government needs to address this situation." He suggests reintroducing a scheme for affordable housing under Section 80IB of the Income Tax Act for another five years and all income earned on renting of properties up to 1,500 sqft to be tax-free.

Pranab Datta, Vice Chairman and Managing Director, Knight Frank India, feels the issue of urbanisation needs to be addressed, as infrastructure is important for any city to grow and sustain. He adds, "The Union Budget can set the tone for a paradigm shift on issues that have a major bearing on the lives of our people. The last Budget had a clear thrust on infrastructure development, which should continue to be a focus area."

According to a recent McKinsey report, 590 million people will be living in cities by 2030 and 68 cities will have a population of more than a million. Such a large scale of urbanisation calls for a corresponding initiative of developing new cities, which are nowhere a replica of the crowded cities of today.

"Policy initiatives that can address the issue of crumbling infrastructure in the existing cities and serve as a guiding light to create new cities will relieve the burdened metro and Tier I cities", Pranab Datta says. It is therefore essential to formulate budgetary policies with a vision and a plan for the next 10-15 years to cope with the demand of increasing urbanisation , he adds.

On a different note, while stressing on affordable housing and tax sops, Sachin Sandhir, MD and Country Head, RICS India, believes the Government should consider moving towards a 'green taxation' system where industries, commodities and companies are taxed on the basis of their ecological footprint and use of non-renewable sources of energy. "With the increasing emphasis on 'green buildings', we are of the opinion that tax deductions should also be extended to individuals refurbishing property and builders looking to incorporate energyefficient technologies, construction techniques and practices, and materials, resulting in carbon emission reduction", he says.

The real estate industry has high expectations from the upcoming Budget. If various issues of concern are addressed, they believe, it will go a long way towards meeting the urgent need of affordable housing in the country.