February 19 2016, 16.51 PM IST || Pocket News Alert
The government at the center led by Hon’ble Prime Minister Shri Narendra Modi, took charge with a lot of expectations and assurances 2 years ago. The real estate sector pinned its hopes for revival and growth from the two major components in the agenda i.e. “Housing for all by 2022” and Development of “100 Smart Cities” besides the overall development of the country with the focus on infrastructure development and encouragement of domestic industry “Make in India” and startups to boost the growth in the economy by improving the ease of doing business in India to create more jobs. Over the last 2 years we have seen positive intent and progress by the government on these fronts.
According to Mr. Venu Vinod, Managing Director, Cybercity Builders & Developers Pvt Ltd, “The government has taken positive steps with the announcement of smart cities, increase in FDI and “Housing for all-2022” that have boosted the sentiments of both buyers and developers in India. However, the budget for the year 2016-17 by the Hon’ble Finance Minister Shri Arun Jaitely on 28th July 2016 that will address key administrative, financial and tax reforms is expected to set the foundation for the years to come with concrete policy directions and budgetary allocations to take the development agenda forward that will spur growth in the future.”
Expectations from the Budget
Infrastructure Status: As developers we seek that the real estate sector should be accorded the industry status allowing better enabling provisions to help trigger the growth in the real estate sector, open avenues for funding of projects from Banks, Financial Institutions, Pension and Insurance funds at cheaper rates to spur the growth.
Simplification and Reduction of Taxation on Real Estate Projects: Multiplicity and complexity of the current tax regime makes the operations cumbersome. We would like to see the clear roadmap for implementation of GST, a simplified process of tax calculation and single challan system for the payment of all tax liabilities.
Reduction in Interest Rates: With the growing young Indian population, it is imperative that the government comes out with enabling policies for first time home buyers. We expect the Government to device a policy or announce an interest subvention scheme to reduce the rates for home loans and make it at par with the global levels. This will reduce the EMI burden and increase the loan eligibility of the customer, making him purchase the property and facilitate demand for real estate sector and spur rapid growth.
Increasing tax deduction limits: The housing prices are heading north; the current provisions of the income tax allow a tax deduction limit of Rs 2 lakhs, which is not sufficient considering the prevailing property prices and the inflation rates. The government should look at increasing the interest deduction limit to Rs 3 lakhs for new home buyers for additional tax benefits on housing loans. This will act as valuable triggers for growth in demand in the sector.
Allocation of Budgets for social infrastructure development : The government must allocate the funds for infrastructure development in the small towns, suburbs or emerging towns which will lead to development of habitable affordable housing projects and help achieve the mission ‘House for all by 2022’ . The government’s target to provide 20 million houses over the next six years can be met only if the government and the developers work together to create unique urban townships.
Single window of clearance: Today the real estate projects get delayed due to the long approval process that leads to unnecessary delays leading to cost escalations. We strongly recommend an introduction of a single window approval of projects with a specified timeline and a penalty clause on the department delaying the process of approvals. This will improve the business environment and speed up the approval and implementation thereby reducing the cost and time incurred.
