Indian Real-Estate Sector Wants Modi-government To Focus On These Four Issues In Upcoming Budget
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Since the present BJP-led government came to power, affordable housing has been one of the top things on the government's to-do list. Indian real-estate sector in the recent times has been disrupted by various initiatives like demonetization, goods and services tax regime (GST) and the introduction of Real Estate Regulatory Authority (RERA).
With Finance Ministry prepping up to announce its last full-fledged Union Budget under the present regime before the country goes to polls in 2019, the government is anticipated to adopt a please-all strategy for individuals and India Inc., including the real estate sector.
Following are some issues plaguing the real-estate sector that the government could address in the upcoming Union Budget 2018-19:
The clearance and approval process for residential real estate projects has been an impediment for a long time. Although many initiatives have been taken to create a conducive business environment in the sector, the demand for single window clearance mechanism in totality is yet to be fulfilled.
If implemented, ANAROCK Property Consultants said single-window clearance can significantly reduce the overall projects cycle time and developers will be able to focus on their core business of project execution.
"Post-RERA, it has become all the more important to facilitate smooth clearances and approvals so that there are no execution delays due to procedural hindrances," added Anuj Puri, Chairman - ANAROCK.
Affordable housing witnessed an increase of 20% in the new launches in 2017 as compared to 2016 and this trend will continue, says Amit Ruparel, Managing Director, Ruparel Realty and therefore, this year the government should focus on providing industry status for the real estate sector as a whole which will ensure easier access to institutional credit and help in reducing developers' cost of borrowing for projects.
Incentives for Green Buildings
Cost of construction for green buildings is expensive and this is what has kept a majority of developers away from such projects. Taking a view of India's deteriorating urban environment, Puri suggested that incentivizing green real estate project is the need of the hour.
"Keeping in view the current and certain future challenges to the environment, the Government should encourage developers with higher incentives in terms of FSI and/or some degree of tax exemption to encourage them to adopt green building technologies," he shared.
Ruparel and Puri both advised the government to reduce the present GST rate, which will boost the buyer sentiment in the industry. Presently, a GST of 12% is levied on an under-construction property which is significantly higher than the previous tax rate.
"Additionally, stamp duty and registration charges are outside the ambit of GST, hope in this budget, the government subsumes these levies into GST," Ruparel added.