New Delhi, Feb 27 (IANS) India’s realty inductry is looking for clarity and favourable changes in the upcoming budget for the next fiscal, notably on issues such as independent regulator, single window clearance and enhanced tax deduction limits.
Expected to be passed during the budget session, the real estate bill has seen 20 amendments. It makes it mandatory for the registration of all real estate agents and projects who wish to sell a plot, apartment or building with the Real Estate Regulatory Authority (RERA).
It also calls for ongoing projects without completion certificates to register with the watchdog.
“We are hopeful that this annual exercise will announce the much needed Real Estate Regulatory Bill; which has been pending for long now. This will bring in more transparency in the system and will help in avoiding duplicity and wrongful by fraudulent,” said SRS Group chairman Anil Jindal.
The industry is looking forward to a single window clearance to save time, cut costs and benefit the customers. Depending on the project size, developers have to meet about 6-8 conditions now after the environment ministry reduced the number of conditions from 30.
“Introducing Single window clearance for speedy approvals of projects to reduce cost over-runs, tax sops and more funding for green projects are some of the measures which can put back the sector on the growth trajectory,” said T. Chitty Babu, chairman and CEO of Akshaya.
Increasing tax deduction limit for housing loans is another crucial decision being awaited by the real estate industry.
Currently, customers can only claim tax benefits of Rs.2 lakh after taking possession of the property if construction is completed within three years. If the builder delays construction beyond three years, tax benefits reduce to Rs.30,000.
Instead of allowing customers to receive tax benefits after possessing the property, real estate industry wishes the Budget incorporates a provision which enables customers to receive tax benefits from the time they start paying interest on home loans.
“The budget should consider to increase tax deduction limit for housing loans making it easier for people to own homes. Real Estate Investment Trusts (REITS) should be exempted from taxes on rent, stamp duty, transfer of assets and distribution of dividends so that theses trusts become efficiently functional,” said Experion Developers chairman Hemant Tikoo.
Another major issue with taxes for home buyers is the multiplicity of taxes. Buying an under construction property requires buyers to pay service tax, VAT, excise tax, customs and others to form about 22 to 25 percent of the total cost of the property.
However, the industry feels passing the Goods and Services Tax (GST) bill in the Rajya Sabha can help reduce the multiplicity of taxes.
“We look forward to the implementation of GST Bill in a definite time period, which will replace all other levies by Central and State governments and help the real estate sector in many ways. A single tax will eliminate the need of paying various taxes and provide a big relief to developers as well as customers,” said Jindal.
Jindal also highlighted that government should increase its spending on infrastructure as it aims to achieve the ambitious target of housing for all by 2022.
Confederation of Real Estate Developers Association of India (CREDAI) president Getamber Anand said the Union Budget should give a robust and uniform definition of affordable housing.
“Restricting the definition of affordable housing to 25 square meters or 40 square meters amounts to scuttling of the vision. The Budget would do well to adopt a uniform definition of affordable housing comprising dwelling units with carpet area up to 90 square meters in non-metros and up to 60 square meters in metros,” said Anand.
He said capital gains exempt from tax under Section 54F invested in the construction of house has to be increased to five years from the current three years due to the long approval processes involved.
Anand also pointed out that a number of anomalies in the Income Tax law are proving detrimental to investments in the housing sector.
“Under Section 43CA property transactions are being taxed at the guideline values where as the market price is much lower. Joint Development Agreements are being taxed as though income accrues at the time the agreement is entered into. Budget is expected to remove these anomalies,” said Anand.
Akshaya’s Chitty Babu said despite government bringing in initiatives like RERA and opening up more FDI, growth in real estate sector has been sluggish.
“Our first demand would be to provide infrastructure status to the real estate industry to attract more funds. A slew of tax concessions for individuals as well as on housing insurance premium to accelerate growth and demand for housing,” said Babu.
Appreciating government’s announcement of smart cities, increased FDI and ‘Housing for all by 2022, House of Hiranandani chairman Surendra Hiranandani said these announcements boosted the sentiment of both buyers and developers.
However, Hiranandani called for the promotion of REITS and the removal of Dividend Distribution Tax (DDT) which he termed as a roadblock.
“There hasn’t been a single REIT listing in India since its inception and we attribute this to the existence of DDT (currently 15 percent). Removal of DDT (tax levied on the dividend paid to investors) will result in a rush of investment in REITs and this could prove to be decisive for the sector,” said Hiranandani.