Budget 2017: 3 key hopes of the realty market
With the union budget on the verge of being announced, the real estate sector has come up with a host of views and demands. We look at 3 key expectations of the realty market, from Budget 2017
1. More clarity on REITs
Easing the guidelines for real estate investment trusts (REITs), will open the way for the realty sector to get easy funding and ensure timely completion of projects, say developers.
"Tax clarity on REITs, needs to be worked upon. A simpler structure with fewer hurdles, shall certainly help investors and buyers, by encouraging hassle-free transactions. One of the major reasons for lack of adequate funds, is the high borrowing cost, which also results in delays in completion of projects," explains Sushil Raheja – CEO, Raheja Homes Builders & Developers.
2. GST-related benefit for the real estate sector
The sector is eagerly awaiting clarity on the slabs slotted for the real estate and the construction market, in the Goods and Services Tax (GST) structure. Experts believe that taxes should be reduced, especially for the affordable housing segment.
See also: Can budget 2017 compensate for demonetisation's impact on realty?
"Given the introduction of GST, homes will also now attract a tariff. From our perspective, it would be beneficial, if home buyers can come under the lowest possible slab of the GST, thereby, enabling greater affordability for potential home buyers," says PNC Menon, founder chairman of the Sobha Group.
Analysts point out that service tax exemptions for affordable housing, are not a part of the model GST law and add that affordable housing should be exempt from service tax under the GST, to encourage the government's scheme for 'Housing for All by 2022'.
3. Tax benefits for home buyers
We would like to see some tax benefits for home buyers, through greater exemption in the interest paid and principal repayment on housing loans, says Raheja.
"If direct taxes are brought down, it will also act as a major boost to the industry. A deduction in income tax rates and stamp duty, will also be great measures," adds Raheja.
Another way to boost demand, is to provide tax benefits for NRIs who invests in Indian properties, say analysts. The central government can also reduce the stamp duty in the states/union territories where they are in power. Such a move, could encourage other states to follow suit.
Other key demands
The real estate fraternity is optimistic that the government would take note of the following demands:
- Imparting industry status to the realty sector – a demand that has been lingering for many years.
- The affordable housing segment should be completely exempt from service tax.
- Promoting single-window clearances, for ease of doing business.
- Immediate hike in HRA exemption limit.
- Further clarity on the Pradhan Mantri Awas Yojana (PMAY) and guidelines to apply for the same.
- Skill and training support to the realty sector and incentives to the organisations involved in skill development.
