Submit :
News                      Photos                     Just In                     Debate Topic                     Latest News                    Articles                    Local News                    Blog Posts                     Pictures                    Reviews                    Recipes                    
Union Budget
Union Budget 2016: Developers look up to FM for revival
It's Budget time again, and real estate sector is yet again pinning on the hope of a slew of measures from the government which will see the revival of the struggling sector.

While most of builders and realty experts believe that measures to improve consumer sentiments through income tax rebates and reduction in borrowing rates can put the life back into the system, others wants the government to take long term measures by implementing the much-talked about REITs, Special Residential Zones and Real Estate Mutual Funds (REMFs) to make the real estate more vibrant. Here are the excerpts.

N. Nandakumar, Ex-President, CREDAI Tamil Nadu & MD, Devinarayan Housing and Property Developments Pvt Ltd.

As the Real Estate Sector has undergone considerable stress over the past couple of years, it is inevitable to announce substantial credible measures in the Union Budget 2016 with a long term view of reviving the Industry. If the Central Government's vision "Housing for All" is to be accomplished, the primary factors those influence the affordability needs to be definitely considered.

Few of the key areas that the FM should look into are:

  • Raising the limit on interest payment towards exemption from tax purview.

  • Announcing current threshold for principal repayment as part of Income tax deduction.

  • Debt restructuring for all project loans given to developers without levy of penal interest and additional charges.

  • Initiatives that would lead RBI to consider special rate of interest for the category of affordable loans for different cities and metros as against the present uniform home loan policy.

  • Review the service tax component and other taxes for affordable home projects together with permitting creation of special residential zones which would cater exclusively to the lower middle income group and middle income group and EWS sectors.

  • Abolishing import duties on construction equipment which would lead to more automation thereby reducing the project times and cost.

  • Provide tax incentives for import of technology for rapid construction/cost optimisation.

  • Reduce the implications of environmental clearances by increasing the threshold from 20,000 sq.m to 150,000 sq.m which would save considerable time and also provide the mandate to the local approving authorities by suitably incorporating norms to be adopted and development regulations of each state's urban bodies.

Anuj Puri, Chairman & Country Head, JLL India:

The real estate sector, which is emerging from a painful and prolonged slowdown, is expecting favourable and growth-stimulating announcements from the government in its forthcoming Union Budget. One of the major issues, property investors and home buyers face, is delay in completion of projects by builders across the country.

The government should offer buyers financial protection from construction delays.The existing provision allows buyers to claim tax benefit upto Rs 2 lakh for under construction property which should be completed within three years. If the completion date extends, the benefits reduce to Rs 30000 and the burden of buyers multiplies as they have to pay EMIs along with the rent for their current accommodation.

Instead of offering them full tax benefits only from post-possession, home buyers should also enjoy the benefits right from the time they start paying interest on their home loan. This will ease their monetary burden considerably and help more home loan disbursements. Similarly, as per the present provision, if a buyer purchases an under-construction property from capital gains, he can avail exemption only if the construction is completed within three years. Since there can be delays due to various reasons, the construction timeline should be extended to five years.

Provide more tax saving on home loan and house insurance premiums. The current limit of Rs 2 lakh should be enhanced to Rs 3 lakh to benefit more. Also, tax concessions on house insurance premiums should be introduced to encourage users to insure their homes from various natural calamities.

Rise house rent deduction limit for self employed,who draw pays without an HRA component, from the current maximum deduction limit of Rs 2,000 a month under 80GG.

As construction industry takes lion's share in environment pollution, the Budget should provide more incentives to boost green buildings for sustainable development. Since the cost-factor plays a major role, the government should absorb the extra cost and introduce incentives to encourage buyers/builders to go green.

Make additional allocation to develop infrastructure in fringe areas of cities and metros to promote affordable housing. Also, developers of affordable housing projects should be provided with cheaper finance options to complete the projects in time.

Remove the Dividend Distribution Tax (DDT) to encourage REITs. There has not been a single REIT listing ever since the announcement last year. The presence of DDT deters people to venture into it. The government should do away with it in the Budget.

Provide clarity on GST implementation. For the revival of commercial real estate, implementation of GST is vital. The government should indicate specific date for its implementation. The retail and e-commerce sectors also seek earlier implementation of GST.

Arvind Jain, Managing Director - Pride Group, Pune:

Every Indian plans to buy a home as and when it becomes financially viable for him or her to do so, and every year brings a new section of young Indians who enter the stream of employed and harbor this aspiration. For potential home buyers, favourable budget is one of the major decision-makers.

Positive changes in indirect and direct taxation policy for salaried class, as well as incentives on property purchase, can boost their financial confidence. Raising the income tax exemption limit will have positive impact on long-term saving and spending patterns. As property is the most favoured investment option for every Indian, the available of more disposable income can satisfy their aspiration. Similarly, tax sops on home loans will trigger more demand for homes and hence help revive the industry.

Parveen Jain, national president, NAREDCO:

The top real estate body National Real Estate Development Council (NAREDCO) too has lined-up a set of proposals to be included in the budget for the revival of sagging realty sector.

NAREDCO President Parveen Jain emphasized the need of industry status to the real estate sector and infrastructure status to the housing sector to enable them to attract more investments from large companies and inculcate a sense of "corporate culture and discipline" which will benefit the economy in general and customers in particular.

There should be Special Residential Zones (SRZs) for low cost or affordable housing similar to Special Economic Zones (SEZs) in PPP model where incentives and concessions should be provided through a single window. This will increase the supply of affordable homes in the country.

Land parcel should be adequately increased to meet the demand of 18.78 million housing units for EWS and LIG categories. To achieve the target of 20 million dwellings by 2022, the land and bank financing should be made easy.

Similar to other developing countries, the Housing Finance Companies (HFCs) should get an access to long-term funds like Provident Fund, Pension funds and Insurance for infrastructure and housing development.

Also banks should hike their allocation for housing from the current 3 per cent to 5 per cent of their incremental deposits. This additional fund should be channelized through HFCs registered under National Housing Bank.

To lessen the burden on home buyers, the government should increase the tax limit to Rs 3 lakh from the present Rs 2 lakh of the interest paid on home loans on a self-occupied house.

The three years period for completion from the year of borrowing should be abolished as this will provide the much-needed impetus to housing sector.

The priority sector lending should be extended for home loans - up to Rs 25 lakh for rural, small and medium cities, Rs 35 lakh for metros and Rs 50 lakh for mega cities.

Rental income should be taxed at a flat 10% rate. This will bring down the rentals.

The government should give top priority to Real Estate Mutual Funds (REMFs) and Real Estate Investment Trusts (REITs)and make them free from income tax for at least for 10 years, both for non-residents and residents.

External commercial borrowing should be allowed in all spheres of housing and realty development, including SEZ projects, and FDI is allowed in all housing projects including the under construction ones.

The real estate experts believe that given the required impetus, the real estate sector has the ability to turn around the Indian economy because of its forward and backward linkages with other key sectors and huge employment potential.

Will the Union Budget 2016 meet their expectations and revive the sector or disappoint them again with a lackluster show? The situation is of wait and watch!

Email Id
Verification Code
Email me on reply to my comment
Email me when other CJs comment on this article
Sign in to set your preference
merinews for RTI activists

Not finding what you are looking for? Search here.