Realty reels out Budget wish-list

The real estate sector is hoping that the upcoming Union Budget will come up with measures that will help it offset the temporary setback caused by demonetisation. Though Prime Minister Narendra Modi did attempt some kind of damage-control in his address to the nation on December 31, a lot more is expected from this annual exercise which has been advanced to February 1 this year. Industrial bodies, along with majority of developers, have come out with their Budget wish-lists for the FM to take into consideration.

The National Real Estate Development Council (Naredco) has asked Government to introduce necessary reforms in the upcoming Union Budget to revive the troubled real estate sector. It has sought infrastructure status for housing sector, at least to cover low and MIG category housing units.

Praveen Jain, President, Naredco, has said, “Granting of infrastructure status to projects will attract large companies to the sector and inculcate corporate governance.” For the sake of convenience and uniformity in law, he said, the ‘built-up area’ in the Income Tax Act should be replaced by the ‘carpet area’ as defined in the Real Estate (Regulation and Development) Act 2016.

Naredco has also demanded lowering of housing and project loan interests. It has suggested that the Government should bring housing loan interest rate between 7-8 percent and project loan interest rate between 10-12 percent and place moratorium on repayment of principal amount of all pending and new loans for three years period, to retrieve developers struck with delayed / stalled projects.

It has suggested that real estate should be brought under its purview merging all taxes, duties, charges, cess etc. “This will put the sector on high growth path and will help achieve the target of building two crore housing units by year 2022 under the Pradhan Mantri Awaas Yojna.” The industry body has also suggested a number of other taxation related incentives to embolden the purchasing power of buyers.

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Commenting on various tax rebates suggested for homebuyers, Naredco Chairman Rajeev Talwar said, “Consumers are already burdened because of the problems of the industry. Supporting the Industry will help consumers indirectly. He opined that to boost savings and sales, it is important that Government looks at incentivising the consumers in all possible ways. Given the example of cities like Delhi and Mumbai where most houses are priced Rs 50 lakh and above, he felt that tax sops in the upcoming Union Budget should cover these segments also.

Herewith we reproduce the pre-Budget expectations voiced by other realty players and sector experts:

 Deepak Kapoor, Director, Gulshan Homz: Housing for all and affordable housing have been the two major jargons of the Government for the real estate sector, where work has been carried out diligently. It’s time now to expand these concepts and increase the benefits for other segments of the population as well. At present, only the EWS and LIG segments have access to the PMAY benefits, and still there is a large segment of youth population which is in dire need of an abode at low cost, and they don’t fall under such categories. This Budget must focus upon providing such benefit to the masses and provide clarity over projects been covered under this scheme. Industry status for the realty sector has been long awaited and it would be a game-changer for the sector if it is granted this time.” 

Ashok Gupta, CMD, Ajnara India Ltd.: “We are projecting infrastructural development as the core aim of the Government for this Budget. Huge amount for infra development may be announced this year as well especially for developing regions of the country falling under AMRUT scheme. Apart from that, GST’s proper implementation, relief on income tax, more incentives for digital means of transacting and promoting REITs and InvITs might be amongst the highlights from the upcoming Budget. No direct benefits for the sector are expected at this time, as recent rate cuts and affordable housing incentives have already been announced by the Government. We might only witness the Budget providing indirect benefits to this sector that will act as a catalyst in the long run.”

Dhiraj Jain, Director, Mahagun Group: “This Union Budget, policies for allied industries such as steel and cement need to be standardised as it indirectly affects the cost of housing units. Also, tax deduction limit for housing loans of Rs. 2 lakh is quite less especially for major Tier-1 cities where ticket sizes cross Rs 1 crore in several cases. This limit can be looked upon along with reduction in stamp duty charges to allow higher savings. Finally, changes in the tax slabs are pretty much on the cards that will allow young working class to look up to real estate as an avenue for investment or even residing.”

Pradeep Aggarwal, Chairman, Signature Global: “The Union Budget 2017-18 is expected to bring cheer to the masses in the country. We have just witnessed banks reducing lending rates and the Government also promoting affordable housing for EWS and LIG categories by providing special interest rate reductions. This year’s Budget will focus upon improving infrastructure in the country in order to bring smaller regions into the limelight. Making changes in the income tax slabs will allow higher savings and better spending capacity for the public, thus allowing people to look at real estate as an attractive avenue for residing and investment purpose.”

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Ashwani Prakash, ED, Paramount Group: “This year’s budget might not offer much to the realty sector directly as the gGvernment has already been offering benefits and incentives during the course of year 2016. Last year itself, a lot has been delivered by the Government for the budget housing segment and infrastructure of the country, and this year too infra segment might receive the biggest chunk. Single-window clearance and industry status are urgent needs of this sector in order to provide the much needed impetus on a larger scale. With RERA and GST to become operational this year, it is imperative that single-window clearance is announced across the country.”

Vikas Bhasin, MD, Saya Group: For the real estate sector, the Government is already moving on the right track with timely announcements and policy implementations taking place at a decent pace. Post-demonetisation and with the banks reducing lending rates, the Government is leaving no stones unturned to achieve its target of Housing for All by 2022. It is important though to reach out to all the segments and not only the weaker sections of the society. Rebates on income tax, clarity over GST and RERA, easing norms for FDI, making route for REITs and InvITs easier and passage of the long-awaited land acquisition Bill should be in plan for the upcoming budget session 2017-18.”

Avneesh Sood, Director, Eros Group: “We are predicting the Government to ease the taxation slabs and provide higher spending power to the consumers that will indirectly benefit the economy and the realty sector. Infrastructure will be a crucial side where the Government might announce big projects and greater spending. This in return will allow the conversion of rural to urban regions, thereby promoting Tier-II and Tier-III cities.”

Pratik K Mehta, MD, Unishire: “Real estate is second largest contributor to country’s GDP and yet lacks industry status. Being recognised as an industry can improve the availability of better financing options for the sector which currently is forced to avail funds through NBFCs at much higher interest rates. Hence, we definitely look forward to it in this Budget. Also clarity on GST is long awaited and we look forward at this uncertainty to end. As a sector we hope to fall in the interest rate bracket of 12 per cent”.

Prashant Solomon, MD, Chintels India Ltd.: “We look forward to real estate being given industry status. This will pave way for increased adoption of industry best practices by the developers and attract further investments in the sector. The long and complex process of obtaining approvals, leads to huge time and cost overruns. A single-window clearance will go a long way to ensure that projects remain viable and corporate houses stay invested in the sector.”

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Hari Challa, MD, Aliens Group: “With so many things happening and other key developments in pipeline we are hoping that due to the demonetisation it will be a more real estate-friendly Budget this time. The cost of raw materials, state and Central taxes should come down so that we can offer our premium projects at more affordable prices to the buyers. Other than this, GST once implemented should help to ease the monitory pressure on developers and buyers alike. “

Sahil Kapoor,Executive Director, RE/MAX India: “Post-demonetisation the expectations are very high from the Budget 2017-18 for real estate industry. The Government should reduce the interest rates as it will benefit the homebuyer by lowering their EMIs and will eventually revive the demand of real estate market.”

Samir Jasuja, CEO, PropEquity: “We expect clarity on taxes on REITs as the confusion has led to very poor interest by investors. We believe increase in tax deduction limits for housing loans is extremely critical to boost housing sales as this will lead to many families moving to owned flats instead of rented ones”.

Mr. Akshay Taneja, MD, TDI Infratech Ltd. “Clarity of GST as to which tax rate will be applied to the real estate sector is waited. This will define the way real estate sector will move this financial year. Another important step would be to increase the tax deduction limit for housing loans especially for the buyers in metro cities. If government can take care of these two things in this budget then the sector will definitely witness a boost in sales. This we can say from the latest step where banks have already slashed home loan interest rates”.

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