Top #10 Expectations of Realty Giants For Budget FY18 Relaxation in income tax rates, clarity on GST, policy framework to standardize construction materials include some from the long list of requisities the real estate industry wants the Narendra Modi government to work on.
Opinions expressed by Entrepreneur contributors are their own.
You're reading Entrepreneur India, an international franchise of Entrepreneur Media.
After having dealt with a massive economical hit on demand post last year's unprecedented move of demonetization by the Central Government, the real estate industry has high expectations from the upcoming Budget 2017-18.
Relaxation in income tax rates, clarity on GST, policy framework to standardize construction materials include some from the long list of requisities the real estate industry wants the Narendra Modi government to work on.
Listed are 10 top expectations from real estate players operating in India.
Clarity on tax regime after GST
While the GST (goods and services tax) structure was announced last year, the real estate industry is waiting with bated breath to see which tax rate is applied to the real estate and construction industry. What would happen to the abatement scheme allowed under the service tax regime? Currently, developers and home buyers can obtain service tax benefits under the abatement scheme.
Expectation: The government should allow input credit as it can lead to a reduction in home prices.
Implementation of policies like RERA, land acquisition policy and Benami Transactions Bill
The implementation of policies like RERA, land acquisition and Benami Transactions Bill is one of the common expectations of realty giants for FY18 Budget. Realty experts predict that the overall impact of the implementation of these policies and Bill will boost the cofidence of buyers due to more transparency in industry.
Expectation: Government should implement policies like RERA, land acquisition and Benami Transaction to bring transparency in the process of working in industry.
RERA coupled with GST and demonetization will create a strong framework within which this industry will function told Tushad Dubash, director, Duville Estates. These moves by the Government will help to curb many inconsistencies and unfair trade practices bringing professionalism in the sector.
Incentives for developers to construct more commercial spaces
The government should look at offering incentives for developers to construct more commercial spaces as it will help in attracting foreign investments and amplify India as a business power house, according to Ms. Manju Yagnik, Vice Chairperson, Nahar Group.
Expectation: Growth of commercial property directly results in demand for residential, retail and hospitality sectors. This bodes well for the entire property market.
Single window clearance for projects
'While the demand for housing in metropolitan cities is only on the rise, and the industry is not able to bridge the gap between demand and supply quick enough as the already lengthy process of construction is further increased by the difficulty in obtaining permissions' said Chintan Sheth, Director of Sheth Corp.
Expectation: The Government needs to put in place the single window clearance for projects.
Developers have for long been demanding single window clearance to remove bureaucratic delays, which in turn delay delivery of homes. A single-window clearance system would drastically boost the real estate sector in India.
Infrastructure development will help improve connectivity
There is an expectation from the Government to give a massive push to infrastructure as it one of the key elements to boost economic growth going forward. 'Infrastructure development will help improve connectivity within the city and bodes well for the real estate projects coming in the suburbs and MMR region which will further spur growth of the sector', according to Chintan Sheth from Sheth Corp.
Expectation: Infrastructure development will help improve connectivity within the city and bodes well for the real estate projects coming in the suburbs and MMR region
'We are expecting that a certain part would be reserved for infra development specially in tier 2, tier 3 cities falling under Atal Mission for Rejuvenation and Urban Transformation (AMRUT) scheme.' said Dr. Anil Jindal, Chairman, SRS Group.
Ease in tax reporting and income tax slabs
With its maximum governance mantra, the government should look at easing the tax reporting structures. The relaxation in income tax slabs and higher degree of rebate should be passed for the common man as the post demonetization benefits.
Expectation : With the earlier stated intention of reducing corporate tax as well, the tax net should be widened while simultaneously reducing actual tax incidence
The government should look at: a) Reduced level of taxation of REIT income. B) Waiver of capital gains for the developer at the time of transfer of property into REIT. C) Removal service tax on lease premises, according to Sachin Sandhir, RICS.
Bigger income tax incentive for first-time home buyers
For the very first-time home buyers were given additional INR 50,000 tax exemption in the last Budget for a house worth upto INR 50 lakh with a loan of upto INR 35 lakh. This announcement mostly benefited end-users in tier-II, III cities but not as many in the bigger metros where housing is largely above this specific limit. Can the upcoming Budget bring in similar tax exemption for first timers in the metros too?
Expectation: A higher limit specific only to the bigger metros can be introduced.
According to JLL India's Anuj Puri, "Given the lack of institutionalized rental housing in Indian cities, such a move could spur many fence-sitters into moving out from their rented apartments into owned houses. It could also make developers come up with products suiting this segment. In the previous Budget, no financial protection was offered to end users against project delays."
This Budget can extend tax rebates in cases where projects get delayed due to bona fide reasons. All these efforts can help the government move closer to its dream of "Housing for All' by 2022.
Offer financial protection from project delays to home buyers
The home buyers should be offered financial protection from the project delays by Government. The deduction on interest of self-occupied houses is capped at Rs 200,000.
For under construction residential units, however, if the construction is completed after 3 years, then the deduction is just Rs 30,000. This 3-year period starts from the end of the year in which the loan was taken.
Expectation: The government should consider allowing interest deduction in delayed projects cases without the cap of Rs. 30,000.
Lately, there have been many delays in the completion of many housing projects beyond the 3-year period. This has caused hardships to property buyers.
Tax-savings on housing loan and housing insurance premium
The tax deduction limit of Rs 2 lakhs on interest served on a housing loan should be raised, considering that most homes in the metro cities are priced at over Rs 70 lakhs. This will help home buyers.
Expectation: The government should increase tax deduction limit for housing loans.
Also, tax concessions on house insurance premium could be introduced to encourage home buyers to insure their homes. Similarly, the tax exemption limit could be increased by about Rs 1 lakh and be auto-set to match inflationary trends in a financial year.
Provide tax saving on housing loan and on house insurance premiums
The current limit of INR 2 lakh is insignificant given the ticket sizes in cities, especially in bigger metros like Mumbai, where an overwhelming majority of the available housing is priced at, or above, INR 1 crore.
Expectation; The government should increase the tax deduction limit for housing loans, especially for buyers in metropolitan cities.
The tax exemption limit should be auto-set to match inflationary trends in a financial year. Also, tax concessions on house insurance premiums could be introduced to encourage end users to insure their homes, according to Anuj Puri from JLL India.