Budget: Industry seeks clarity on affordable housing, GST
By: MagicbricksAffected by demonetization of high-value currency notes in the middle of pro
longed slowdown, the real estate sector is now betting big on Budget 2017, which will be presented on February 1. The industry people are hoping for the revival of their fortunes.
Here are the excerpts from their wishlist on Budget 2017 -
Ravindra Pai, MD, Century Real Estate
"We believe that with two of the most significant reforms which will contribute to the cleaning up of Real Estate in the long run which is the Demonetisation and implementation of RERA in the year 2016 as also the stated objective of Housing for all by 2022, we are at an inflection point with respect to the Real Estate industry.
We are hoping that in this budget, the term affordable housing is clearly defined and also accorded "Industry Status". We would also like to see more spends as also concrete steps in the digitisation of land/property records which is in tune with the digital India vision of the PM. This will considerably reduce litigation, free up more lands in cities to make it more affordable and reduce project timelines which will directly translate to lower costs to the end consumer."
Ravi Ramu, CEO & MD, VBHC (Value & Budget Housing Corporation Private Limited)
"We are anticipating the Budget with a heightened sense of expectation. The Finance Minister has a considerable opportunity in this Budget to enable the Affordable Housing segment to provide for what is unquestionably a huge potential to be fulfilled in our Country. There is a considerable lot of things that the Budget can open-up for our Affordable Housing segment.
Our belief stems from a catalyst which will ease impediments like the present approvals regime, the undue burden of both direct and indirect taxes, the high finance costs for our customers and ourselves, etc. We are therefore optimistic as the morning of 1 February 2017 and the Budget approaches."
Dhaval Ajmera, Director – Ajmera Realty
"This year Budget can be a pro housing and people's budget that will hold some really good news for homebuyers. Primary reason could be support and the reform taken by our PM Mr. Narendra Modi regarding Demonetization where liquidity and funding have come into the banking system. Housing industry supports around 300 odd industries and is a major driving cycle for GDP and economy of the country.
To boost consumer demand in the sector, the industry hopes for more favorable taxation measures to be introduced by the government. These include increasing the tax deduction limit for housing loans to make it more in sync with the cost of real estate in metropolitan India, Tax Slab should increase which will be a catalyst to increase the number of people under this belt, Tax benefits for the interest on housing waiver which is currently 2 lakh for Home Loan interest and 1.5 lakh for principal repayment should be double. For instance currently 1.5 lakh can be 3 lakhs which will give relief to the common man and improve his buying decision."
Anil Jindal, Chairman SRS GROUP, We are expecting that a certain part would be reserved for infra development specially in tier 2, tier 3 cities falling under AMRUT scheme. Apart from this, GST implementation, removal of various taxes, stamp duty relaxation, HRA slab revisions, single window clearance must be amongst the highlights of the budget. This will allow people to look at real estate as an attractive market for investment purposes too."
Sukhraj B Nahar, Chairman and Managing Director, Nahar Group on pre-budget expectations
"The count down to the most awaited Budget for the year has begun and the sector definitely has high expectations for both the common man and the industry. Under the leadership of Mr. Narendra Modi, we are positive to have an announcement that will create a revolutionary change. The government has already expressed its vision of housing for all by 2022 and the backup from the budget will only help in expediting homes to become more affordable while meeting the objectives.
Key factors that need to be looked at are the income tax rate, provide clarity on GST, raise House Rent Allowance (HRA) deduction and announce policies to standardize construction materials in order to uplift the real estate industry. Hike in the HRA deduction limit for salaried people. Any sector can work on a standalone manner hence those factors that impact the sector directly or indirectly would also have to be looked into. Housing loans for the common man, complete clarity for a 'less cash' nation could be a few from the many more."
Suresh Hari, Secretary, CREDAI Bengaluru
"Since demonetization, the Industry is expecting a greater level of facilities and impetus to the Real Estate. The announced incentives to Affordable and low cost housing is the beginning. The expected Industry tag to the sector is a long sought after demand and will improve better financial inflow and management.
Income tax exemption for affordable and dwellings of particular size will ensure that greater reach for demanding home buyers.
Better borrowing terms for real estate industry from commercial banks is a pending demand. Since the Habitat Policy envisages housing for all by 2022, this approach will enable cost of finance considerably comfortable.
Rationalization of plethora of Labor laws, which the Industry faces.
With GST regime kicking in, better tax administration is expected and more incentives for the sector from local governments is sought.
With RERA being implemented, the customer issue of home buyers is well taken care of. The government need to address real estate industry with the better tax rates due to increased cost on account of RERA impacted cost
Cyriac Joseph, Sr Vice President, Marketing, Vaishnavi Group
Lending rate of interest for affordable housing segment (under 50 lakhs) to be around 7%. For the other segments, the rate to be around sub 8%. IT exemption for housing loans to move up from 1.5 lakhs to 2 lakhs. In the non-metro areas, built up area for affordable housing segment to be taken up from 60 sqm to 90 sqm (plinth area). Financial institutions to extend the maximum tenure of loan repayment from 20 years to 25 years
Triggers that could bring the momentum back to the industry:
Lower bank interest rates
Tax sops to the buyers
Single window clearance for developers
Fast track clearance process
Jaffer Ali, Founder and CEO, PropUrban
There are high expectations from this budget particularly because demonetization had a cascading effect on the overall realty sector. Sales volumes fell drastically as prospective buyers postponed their purchase decisions in anticipation of a fall in property prices. Notwithstanding short-term repercussions, this surgical strike by the government to eradicate black money will have far-reaching positive impact on the sector in the long-run.
Moreover, it reflected the government's commitment to streamline processes and eventually make India a favourable investment destination. Meanwhile, to overcome short-term turbulence, we expect measures that will boost buyers as well as developers' confidence. To start with, the government must increase the tax exemption limits on interest and principal repayments for home loans which eventually will incentivize first-time buyers. It must give industry status to the sector which will boost domestic bank lending.
Unavailability of funds at reasonable interest rates often delays construction process and increases the cost of homes. This negatively impacts the end-consumers. Further, the GST to be applied to the real estate and construction industry also needs to be fixed at a rate which must eventually benefit buyers.
The long-pending demand of single-window clearance is the dire need of the hour. If granted, it will give a major boost to the realty sector and reduce inordinate construction delays. Moreover, due to multiple taxes, there has not been a single REIT listing till date. The government must realize its positive impact on the real estate sector and remove all hurdles governing it.
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Pradeep Aggarwal - Chairman . Signature Global
Union Budget 2017-18 is expected to bring cheer to the masses in the country. We have just witnessed banks reducing lending rates and the government also promoting affordable housing by providing special interest rate reductions. This year's budget would be more focussed upon improving infrastructure in the country in order to bring smaller regions into the limelight.
Making changes in the income tax slabs will allow higher savings and better spending capacity for the public, thus allowing people to look at real estate as an attractive avenue for residing and investment purpose. Also, there should be some relaxations made in the income based eligibility criteria for availing the benefits of PMAY in order to accommodate a higher bracket of the earning class in tier I & tier II cities.
Additionally, if not the entire sector then, the affordable segment of real estate can be accorded industry status allowing developers to borrow loans at cheaper rates and many additional benefits which in the long run will encourage more and more developers to participate in developing affordable housing.
Sailesh Puranik, MD, Puranik Builders
Budget 2017 is expected to be out soon. The Real Estate Sector is eagerly awaiting certain crucial changes and certain pertinent steps to strengthen the Sector. Firstly, an industry status is expected for the entire Housing and more particularly Affordable Housing Sector. Construction and Acquisition Finance should also get included in the Priority Sector Lending for Banks.
Additionally, the Center should increase the tax deduction limit for housing loans from INR 2 lakh to 4 lakh, especially for buyers in metropolitan cities. This will help the buyer to save almost 30-35% of his taxes. Even the tax benefit, in the case of a home loan, is provided to a buyer after the possession of an apartment. This should be considered from the day the construction of a particular project has started. It would be helpful if, under 80C, the additional limit is set for the principal amount of the home loan, as usually this limit of INR 1.50 lakhs under 80C gets exhausted under regular investments like PPF, FDs, EPF, insurance premium and much more.
2017 is expected to be the year when the Smart Cities Initiative, RERA, and GST are expected to boost the sector in the right direction. In such circumstances, the Real Estate Sector needs clarity and finalization of the GST slabs vis-à-vis Realty. Other vital points include single-window clearance and subsidized schemes to be extended for homes up to Rs. 1 crore. The Real Estate Sector is collectively expecting Budget 2017 to live up to its expectations.''
Abhishek Bansal, Executive Director, Pacific Group
Retail sector in India is emerging as one of the largest sectors in the Indian economy. The total market size was estimated to be around USD 600 billion in 2015, thereby registering a CAGR of 7.45 % since 2000. It is expected to grow to USD 1.3 trillion by 2020.
Mr. AbhisheK Bansal, ED, Pacific Group, which has been a pioneer in developing shopping malls across north India shares his view on the expectations one has from the upcoming budget, "One of the most important factors for the growth of the Indian retail sector is purchasing power of the consumer.
Therefore, the 2017 budget provides the Government with a perfect platform to widen the tax slabs of individuals, which would in-turn lead to increased disposable income in the hands of the consumer. Also from an indirect tax stand-point, Goods and Service Tax ('GST') is a long awaited reform, as it would play an important role in removing the various artificial trade barriers and would also be a huge boost to trade in the country. It would also help retailers to enjoy the benefits of a simplified indirect tax structure and reduce the cascading effect of taxes."
Shantilal Kataria, President-CREDAI-Pune Metro
In order to boost the housing sector and to achieve the dream of the Prime Minister of providing houses to all by 2022, CREDAI Pune Metro has been in forefront to pitch their concerns to the Govt. The CREDAI Pune Metro expects the Union Budget to think and act favorably to their long pending demands-
1. Real Estate industry is looking forward to increase in income tax deduction on house loan upto Rs. 5 lakhs as that will increase the affordability of homes in mid range segment.
2. Increase the basic exemption limits to Rs. 5 lakhs from the present of Rs. 2.50 lakhs.
3. Give status of infrastructure to the industry.
4. Bring single window clearance system.
5. Remove deemed taxation based on stamp duty valuation: Section 43CA of Income Tax Act
6. The time limit for 80IBA for completion of Affordable Housing project should be extended to 5 years as compared to 3 years.
7. The exemption for investment of sale proceeds in the additional residential property (other than the existing one property) should be provided and necessary amendment should be made in the Act.
8. Give clarity on beneficiaries under Pradhan Mantri Awas Yojana about interest rate exemption of 3% & 4%
9. Give Income Tax incentives to the 1st time home buyers for certain period.
10. Give Income Tax incentive on home insurance premium
11. In GST give clarification on abatement scheme and credit for Input Tax
12. Increase house rent deduction limit
13. Give top priority for digitization of land records and registration process to make them easy to do and transparent.
Atul Goel, Managing Director, Goel Ganga Developers (I) Pvt Ltd
After Demonetization it would be great to see how Govt utilizes funds for the development works especially towards infrastructure development & affordable housing. It is expected that this huge money collected should be consumed for the benefit of poor and middle class.
The only way it can happen is by distributing it through easy loans. It will increase the overall consumption and thus will give a boost to overall market scenario. Real estate will surely benefit with easy and cheap loans. The Government spending should physically go up.
Amit Kumar Agarwal, CEO - NoBroker
We expect the budget to make it more affordable to individual taxpayers to own houses especially in the wake of delayed projects due to demonetization and liquidity pressures on developers. We expect the section 80GG to be revised for making the HRA for self-employed people equivalent to salaried class. We are hopeful that tax deduction on home loan interest would be allowed to be claimed in the under-construction period itself, and the tax deduction limit for self-occupied houses will be increased to 3 lakh rupees on home loan interest. The cap on value of home for additional tax deduction for first-time buyers need to be removed to encourage and enhance home ownership."
Girish Shah- Director, The Wadhwa Group
Given that the IMF has recently cut India's growth estimate for 2016-17 to 6.6% from its earlier projection of 7.6% due to the impact of the government's move to scrap some high-value currency notes, the real estate industry at large will keep a close watch for the Union Budget presentation with guarded caution. However, as an organization, we have always supported positive reforms and progressive policy implementations for the sector, thereby boosting market sentiments and the economy. While demonetization has had its effects, we are optimistic about amendments and addressal of certain key areas such as:
· Implementation of GST with a more unified taxation
· Clarity on the land acquisition policy
· REITs to get activated soon
· Implementation of policies that bring in transparency into the sector like RERA and Benami Transactions Bill
· Make housing affordable by reducing the cost of finance for both developers and buyers
Manju Yagnik, Vice Chairperson, Nahar Group
India is on a brink of a new era, with foreign investment rules, RERA and the emerging smart cities is all summing up to an aspiring 2017 for the realty sector. With such initiatives taken by the government, we perceive a more level playing field for well-known and reputed realty brands. This will improve market sentiments and increase home buyer confidence within the industry. It will also make it more attractive as an industry to invest in, given higher transparency levels and ethical business practiced by various stakeholders. We also foresee more investments by FIIs and foreign investors as well as NRIs who will be happy to invest in properties back home.
We look forward to seeing more government participation in incentivizing commercial property development. 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. Growth of commercial property directly results in demand for residential, retail and hospitality sectors. This bodes well for the entire property market.
Tushad Dubash, Director, Duville Estates
"We look forward to the implementation of the Real Estate Regulatory Authority Bill (RERA) which will bring in more transparency and professionalism into the sector. It is a positive move for developers with an established corporate governance practice. RERA coupled with GST and demonetization will create a strong framework within which this industry will function. It will create a clear demarcation between reputed developers and those with less respect for corporate governance thus making it easier for investors to invest with comfort. This can only create a more conducive environment for foreign investors to invest.
Housing for All and Affordable Housing have been major announcements of the government for the real estate sector in 2016. It would need strong private sector partnership to succeed and achieve its goal. It's time now to expand these concepts and increase the benefits for other segments of the population as well. Industry status for the realty sector has been long awaited and it would be a game changer if approved this time. Overall, it is expected that Union Budget 2017-18 will be a common man's budget where optimistic changes in the income tax structure is predicted."
Getamber Anand, President – CREDAI National
With the Central Government gung ho about accelerating the housing sector, the real estate sector is finally getting the much needed attention. Most of the stakeholders are now hoping this translates into positive policy implementation. This, especially in the context of the Prime Minister's mandate on 'Housing For All' and the highly talked about RERA, calls for a considerable stimulus from the Government to enable and sustain the realty sector.
We at CREDAI feel this will be reflected in tax reform, a large part of which directed via the affordable housing segment. A key expectation to have this year would be the recognition of the housing sector, specifically the affordable housing segment, as infrastructure which would in turn provide access to institutional finance.
The recent interest subvention announced by the Prime Minister, Mr. Narendra Modi, in the same vein as the 2016-17 budget, has established the Government's recognition of the sector in terms of its welfare and growth potential. Taking this forward, we now hope that policies such as Section 43Ca, which has provision for taxation in case sale values are less than ready reckoner rates, as well as Section 194, which calls for a 1% TDS on properties above Rs. 50 Lakh, should be removed. As the market has rationalized, post demonetization, there is no need for such provisions which are grossly unfair to the buyer.
The budget provides the perfect opportunity for the government to create a supportive, inclusive and growth oriented ecosystem for the real estate sector and all its stakeholders. Looking at the real estate perspective, optimism is ruling the roost. It is imperative that incentives be provided not just for end users but for institutional and individual investors as well to transform real estate in to a viable investment asset. With the onset of newer investment instruments such as REITs, the sector needs the support of the invisible hand of the government to guide it towards a long lasting period of development."
Rohit Gera, Managing Director, Gera Developments & VP, CREDAI - Pune Metro
The introduction of the Real Estate Regulatory Act as well as demonetization last year has been extremely disruptive for the real estate sector. The government has already expressed its vision of housing for all by 2022. If this is to become a reality, they will need to provide tremendous amount of stimulus for the real estate sector so that homes become more affordable and get produced much faster to meet the objectives. Steps that can be taken by the government include –
Widen the scope of the tax free status for projects which currently require 90% of the project potential to be developed within 3 years. This is a tremendous deterrent for large-scale projects as it is virtually impossible to complete these projects within 3 years.
To encourage the supply of rental housing and increase the standard deduction available for rental income.
To encourage people to acquire the existing inventory available in the market, allow for an increased deduction of an extra 100% of the interest payment made by the flat purchases to the financial institutions for a 5 year period. This will drive down the effective rate of interest for the flat purchasers. The ensuing increase in real estate activity generating income to the government from other sources, will more than compensate for the reduction in income on account of the increased deduction. In addition I do hope that the government takes steps in the budget to curb the regeneration of Black Money in the economy. A simple measure for this could be limiting total cash payments to say 1% of the total expenses of a company in each month. This will force all payments for all businesses to be made by cheque.
Anshul Jain, Managing Director, Cushman and Wakefield India
Amidst frayed sentiments in the market, the Indian real estate sector has its hopes pined for the upcoming Union Budget 2017-18 slated for February 1, 2017. Some of the key expectations from the upcoming Union Budget are outlined as follows:
Exempting REITs from stamp duty
Over the last year, the government has streamlined the structure of REITs to a large extent. While taxation issues such as dividend distribution tax, long-term capital gains tax on transfer of units have been resolved, REITS still need to pay Stamp Duty charges at the state level. The government should consider convincing the States to exempt REITs from Stamp Duty for, at least for the initial few years, to increase the competitiveness of REITS in India.
Boosting employment opportunity
Finally, the government's 'Make in India' initiative also needs to boost associated real estate infrastructure. This could be done by providing tax incentives for private developers and funds investing in developing industrial and logistics/warehousing parks. These can include exemption from Stamp Duty & registration charges, exemptions / rebates on taxes and duties for materials and machinery needed to develop and operate such parks.
The country saw remarkable progress on the economic and social fronts through policy frameworks such as STPI and SEZs that helped to nurture many sectors. Given the current global competition for these sectors and new emerging ones, the absence of any such regulatory policies could hurt economic growth. Hence, the government needs to revisit the SEZ policy completely or introduce another one, which will provide necessary push and protection for the growth of employment and export revenue generating sectors/industries.
Creation of Supporting Judicial Frame-work
An abnormally high number of all pending civil and some criminal cases with the judiciary involve real estate. This has resulted in locking up a large chunk of much needed real estate out of markets and people and further helped to create shortages / scarcity resulting in further increasing prices. The Government needs to seriously think of adding more resources and mechanisms to deal with real estate related litigation and take care of this huge backlog.
Concurrent steps like immediate creation of a nationwide digital property database, bringing in title insurance, etc. will also help to bring in transparency and better systems that will also help in the implementation and functioning of RERA.
Government needs to provide adequate financial and regulatory resources to support these measures.
PNC Menon – Founder Chairman, Sobha Group
In recent years, for individual home buyers, prices have continued to increase by approximately 7-10% per year. From our perspective, we would like to see the government increase the income tax benefits to this group of home buyers. When we consider the affordable housing segment, we would be delighted to see income tax benefits that can be extended to corporates when they expand through new construction.
Given the introduction of the Goods & Services Tax (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. The "Housing for All" initiative needs strong private sector support to achieve its intended objectives, which I am certainly aligned with.
Anuj Puri, Former Chairman & Country Head, JLL India
Provide clarity on beneficiaries under Pradhan Mantri Awas Yojana
The government recently announced that interest rates of 3% would be applicable on loans of up to Rs. 12 lakh and 4% on loans of up to Rs 9 lakh, under the Pradhan Mantri Awas Yojana (PMAY). Now, two new income categories can avail higher loans with interest subsidies. The Budget should give more clarity on the actual definition of beneficiaries who can avail of these benefits.
For example - would young urban professionals hoping to buy their own apartments but not belonging to either the EWS (Economically Weaker Section) or the LIG (Low Income Group) segments be allowed similar subventions? Also, affordable housing is largely available in the fringe areas of metros and tier-II, III cities. Would certain redevelopment projects within metros meeting the affordable housing definition be granted similar benefits?
Provide income tax incentives for first-time home buyers
Can a first-time home buyer looking at an affordable project get additional income tax incentives for at least five years? The Budget should throw more light on this. Any efforts in this direction would help the government move closer to its objective of delivering 'Housing for All by 2022'.
Also, 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 to owned homes. It could also encourage more developers to come up with products suiting these segments.
Provide higher tax saving on housing loan and house insurance premiums
The government should increase the tax deduction limit for housing loans, especially for buyers in metropolitan cities. The current limit of Rs. 2 lakh is insignificant, given the ticket sizes in cities like Mumbai where most houses are priced at Rs. 1 crore and above. Also, tax concessions on house insurance premiums could be introduced to encourage end-users to insure their homes. Similarly, the tax exemption limit should be increased by about Rs. 1 lakh and be auto-set to match inflationary trends in a financial year.
Provide clarity on GST
While the goods and services tax (GST) tax structure has been announced, the real estate industry is waiting with bated breath to see which tax rate is applied to the real estate and construction industry. Clarification would also be needed on the abatement scheme, and whether credit for input tax would be allowed if the composition scheme has been availed by developers.
Ease tax reporting and tax slabs
The government, with it mantra of maximum governance, should look at easing the tax reporting structures in the upcoming Budget. Also, the benefits of demonetisation exercise should be passed on to the common man in the form of easing of tax slabs and offering some higher degree of rebate. With the earlier stated intention of reducing corporate tax as well, the idea is to widen the tax net while simultaneously reducing actual tax incidence.
Raise house rent deduction limit
Salaried persons get house rent allowance (HRA) as a component of their total salary, and can therefore claim a deduction. This deduction can be substantial in cases where the salary and its HRA component are higher. However, self-employed persons and those who draw lump sum pays without an HRA component can only claim a maximum deduction of Rs 2,000 a month under Section 80GG. The Budget can and should address this anomaly.
Kishore Bhatija, MD – Real Estate Development, K Raheja Corp
We are anticipating positive reforms to be announced for the sector in the upcoming Union Budget. We are hopeful that the Finance Minister addresses certain key issues such as easing tax reporting and Income Tax slabs as well as the IT SEZ Policy and clarity on the much debated GST. Implementation of other policies like RERA, land acquisition policy and Benami Transactions Bill will infuse transparency and bring the much-needed credibility to the sector. Buyer sentiments are improving (post demonetization) as the banks are passing on the benefits to the customers by reducing the interest rates on loans. REITs too need to kick off, and the reduction in the cost of finance for both developers and buyers will make housing more affordable. All such policy reforms will give the realty sector the desired push.
Prashant Solomon, Managing Director, Chintels India Ltd. and Hon. Treasurer, CREDAI NCR
The Indian real estate sector remained in headlines due to many policy level changes in 2016. RERA Act 2016), Benami Transaction Prohibition (Amendment) Act 2016, amendments in REITs regulations, GST and Demonetization, were the ones that were considered to have the potential to change the way real estate sector work. In 2017, the sector is eagerly looking forward to and has several expectations from BUDGET 2017. We look forward to real estate being given Industry Status. This will pave way for increased adoption of industry best practices by the developers and attract further investments in the sector. The long and complex process of obtaining approvals, leads to huge time and cost overruns. A single window clearance will go a long way to ensure that projects remain viable and corporate houses stay invested in the sector. The recent announcement of slashing home loan rates by the PM will be a boon as far as affordable housing is concerned and we expect the sops to be extended to the middle class home buyers as well. Lastly, the recent demonetization drive by the PM is perceived as a significant reform. In the long run, this measure along with others such as Real Estate (Regulation and Development) Act, 2016 (RERA) will align the real estate sector to the international standards of doing business. However, despite the positive initiatives undertaken by the Government the real estate sector did not see the boom it expected. We hope that the Budget 2017 to have more constructive and definite reforms which will help in an atmosphere of growth and development in the real estate sector.
Vineet Relia, Managing Director – SARE Homes
The year 2016 has been an exciting year for the real estate sector with many policy level announcements undertaken throughout the year, prominent being the passage of the Real Estate Regulatory Bill which will pave the way for setting up a Real Estate Regulatory Authority. Prohibition of Benami Property Transaction Act, passage of the Goods & Services Tax Bill, and Demonetisation of Rs500 and Rs1,000 currency notes were some other highlights. Now, as we approach the Union Budget, it is time to walk the talk followed by robust execution to attract investments in the realty sector.
We are hopeful that the upcoming budget shall include much awaited clarity on GST, RERA, easing norms for FDI, making route for REITs and InvITs easier and passage of the Land Acquisition Bill. Also, there should be standardised policies for allied industry as they have an important bearing on the cost of housing units.
Finally, there is a dire need to provide industry status to the realty sector and introduction of single window clearance mechanism which are long pending. More so since an integrated township involves development of residential, community and commercial buildings along with establishment of facilities such as roads, water supply, sewage system, electricity etc. both these policies are of utmost importance. This will motivate genuine players to come forward and step into promotion and development of large integrated townships.
Abhishek Bansal, Executive Director – Pacific India
In 2016, the Realty and Retail sectors remained in headlines due to policy level changes - RERA Act 2016), Benami Transaction Prohibition (Amendment) Act 2016, amendments in REITs regulations, GST and Demonetization drive to name a few. These along with the ongoing economic changes, relaxation in FDI are considered to have the potential to change the way sector will shape up in 2017.
We are very optimistic about the upcoming budget and pinning our hopes on the Finance Minister. Affordable housing is the key to emerge the sector from the current crisis and our PM's announcement on reducing the home loans is worth the appreciation. I feel Year 2017 will be good for the Real Estate sector. I foresee 15-20% growth in the sector. The Overall impact will be good on economic growth and momentum.
Sahil Kapoor,Executive Director of RE/MAX India
Post demonetization the expectations are very high from the budget 2017-18 for Real Estate industry. As the Union Budget is around the corner, the Government should reduce the Interest rates as it will benefit the home buyer by lowering their EMIs and will eventually revive the demand of real estate market. In the year 2016-17 budget included some key announcements which was to lower the housing cost and affordable for the individual.
In 2017 the government has enforced multiple reforms for the Real Estate Sector. The year will see the industry get into a 360 degree makeover with the brokers and developers becoming more professional and working ethically. With the implementation of RERA - the industry will be customer centric and hence will improve the overall image of the sector. Hope that the real estate industry will benefit from the initiatives taken by the Government.
Ajay Jain, Executive Director, Investment Banking & Head, Real Estate Group
A sectoral specialist with close to 25 years of experience, Mr. Jain has been into fund-raising activities from banks, PEs, NBFCs, mutual funds, HNIs, overseas investors and structured financiers. He has extensive knowledge of various sectors such as real estate, infrastructure, steel, cement, mining, textiles, lifestyle, E-commerce, IT-enabled services, pharma and auto ancillaries among others. In his previous assignments, he worked in senior executive positions as a Finance Director/CFO with large companies such as Aditya Birla Group, Uttam Galva, S. Kumar Group, MAN Group, Unimark Remedies and Emco Ltd.
Avneesh Sood, Director, Eros Group
Government has already been very active for the realty sector since the Union Budget announcement for 2016-17 last year. Major incentives for both, developers and buyers was announced under affordable housing initiatives and rental housing. Very recently we even observed rate cuts by banks for the housing segment in general, where affordable category received even bigger boosts by the government. This time we are predicting the government to ease the taxation slabs and provide higher spending power to the consumers that will indirectly benefit the economy and the realty sector. Infrastructure will be a crucial side where the government might announce big projects and greater spending. This in return will allow the conversion of rural to urban regions, thereby promoting tier 2 and 3 cities to gain real estate momentum and increase job opportunities.
Deepak Kapoor, President CREDAI-Western U.P. & Director, Gulshan Homz
Housing for all and Affordable Housing have been the two major jargons of the government for the real estate sector, where work has been carried out diligently. It's time now to expand these concepts and increase the benefits for other segments of the population as well. At present, only the EWS and LIG segments have access to the PMAY benefits, and still there is a large segment of youth population which is in dire need of an abode at low cost, and they don't fall under such categories. This Budget must focus upon providing such benefit to the masses and provide clarity over projects been covered under this scheme. Industry status for the realty sector has been long awaited and it would be a game changer for the sector if it is granted this time. Also, clarity over the slab of GST where the realty sector will fall is still uncovered. Overall, it is expected that Union Budget 2017-18 will be a common man's budget where positive changes in the income tax structure is highly anticipated.
Ashok Gupta, CMD, Ajnara India Ltd.
We are projecting infrastructural development as the core aim of the government for this Budget. Huge amount for infra development may be announced this year as well especially for developing regions of the country falling under AMRUT scheme. Apart from that, GST's proper implementation, relief on income tax, more incentives for digital means of transacting and promoting REITs and InvITs might be amongst the highlights from the upcoming Budget. No direct benefits for the sector are expected at this time, as recent rate cuts and affordable housing incentives have already been announced by the government. We might only witness the Budget providing indirect benefits to this sector that will act as a catalyst in the long run.
Dhiraj Jain, Director, Mahagun Group
This Union Budget, policies for allied industries such as steel and cement needs to be standardised as it indirectly affects the cost of housing units. Also, tax deduction limit for housing loans of Rs. 2 lakh is quite less especially for major Tier 1 cities where ticket sizes cross 1 crore in several cases. This limit can be looked upon along with reduction in stamp duty charges to allow higher savings. Finally, changes in the tax slabs are pretty much on the cards that will allow young working class to look upto real estate as an avenue for investment or even residing.
Pradeep Aggarwal, Chairman, Signature Global
Union Budget 2017-18 is expected to bring cheer to the masses in the country. We have just witnessed banks reducing lending rates and the government also promoting affordable housing for EWS and LIG categories by providing special interest rate reductions. This year's budget will focus upon improving infrastructure in the country in order to bring smaller regions into the limelight. Making changes in the income tax slabs will allow higher savings and better spending capacity for the public, thus allowing people to look at real estate as an attractive avenue for residing and investment purpose.
Ashwani Prakash, Executive Director, Paramount Group
This year's budget might not offer much to the realty sector directly as the government has already been offering benefits and incentives during the course of year 2016. Last year itself, a lot has been delivered by the government for the budget housing segment and infrastructure of the country, and this year too infra segment might receive the biggest chunk. Although, single window clearance and industry status is an urgent need of this sector in order to provide the much needed impetus on a larger scale. With RERA and GST to become operational this year, it is imperative that single window clearance is announced across the country.
Himanshu Kanakia, Managing Director, Kanakia Spaces
The Real Estate industry has witnessed several positive movements in 2016. Real Estate sector contributes close to 12 – 15% of the GDP and is connected to many ancillary industries. The budget is a precursor for the year and a platform to announce policies. However, apart from the budget, the government's initiatives like demonetization and reduced interest rates are positive developments which will benefit the sector largely. We are optimistic that the upcoming budget will address the issue of the much-needed reality reforms.
Already announced demonetization has been one of the wise choices but post this announcement, the realty sector expects a friendly budget for the industry. We expect real estate to be given an industry status coupled with seeing more transparency in the working of the realty sector after RERA's implementation. This will improve the buyers sentiment and encourage them to invest in real estate.
Government's move on rate and upcoming budget will hopefully lower the interest rates further.Not only this, RERA's implementation will have an indirect impact on the new launches as they are expected to decline which will have a direct impact on high sales of already existing inventories. RERA will accelerate consolidation of industry and will result in decreased supply. Business will move from unorganized small sector to organized big players.
In 2017 the focus of Indian real estate will largely be on affordable housing to give momentum to the ongoing sales in the market. Recent amendments in the Real Estate Investment Trusts (REITs) have resulted in growth reason being easier access to capital for faster project completion. Largely, those staying in rental accommodation will benefit with affordable housing getting a push from the government from time to time with policy changes.
This rationalisation of the tax regime for REITs in Budget 2016-17 will help make it a reality. We expect that government will focus on the issue of land costs being high. Lowering down the costs for land acquisition will boost many private players. If the government does so, there will be many new launches and quick delivery of projects by the private players. In 2016, for affordable home segment, government had already cut the interest rates but government need to also drive their attention to the housing segment with the ticket size of 1 cr and above, especially the luxury segment.
Vikas Bhasin, MD, Saya Group
For the real estate sector, government is already moving on the right track with timely announcements and policy implementations taking place at a decent pace. Post demonetisation and with the banks reducing lending rates, the government is leaving no stones unturned to achieve its target of Housing for all by 2022. It is important though to reach out to all the possible audience segments and not only the weaker sections of the society. Rebates on income tax, clarity over GST and RERA, easing norms for FDI, making route for REITs and InvITs easier and passage of the long awaited land acquisition bill should be in plan for the upcoming budget session 2017-18.
Hari Challa, MD, Aliens Group
With so many things happening and other key developments in pipeline we are hoping that due to the demonetization it will be a more real estate friendly budget this time. The cost of raw materials, state & central taxes should come down so that we can offer our premium projects at more affordable prices to the buyers. Other than this, GST once implemented should help to ease the monitory pressure on developers and buyers alike.
Pawan Jasuja, MD.FindMyProperty
In 2017 budget announcement, the union cabinet should increase the tax benefit limit for housing loans, especially for the first time home buyers in metro cities like; Delhi, Mumbai, Bangalore etc. As current limit of Rs. 2 lakh is not worth mentioning, tax exemption limit should be increased by about Rs. 1 lakh and be set to match inflationary trends in an economic year. On the other hand the government should focus more on tier 2 & 3 cities for development of affordable housing projects along with better infrastructure facilities because they are future market of real estate. Any kind of efforts and amendments in this track would help the government move closer to its objective of delivering Housing for All by 2022.
Pooja Kundu-Director,PropCurve Private Soulution-
After announcement of GST tax structure, I expect that the real estate industry will witness low tax implications to keep prices under control and pull more home buyers. After big boost for low cost housing, now it is time to bring low interest conditions for affordable category. Also I expect to hear provisions of finance for buyers and investors of small and medium commercial units which is still untouched and after domenitsation only finance is the route to push commercial purchase.
Ashudeep Batra- ED, Exotica Housing
The the sector is emerging strong from a prolonged slow down and has lot of expectations from this year budget as well. Since real estate promotes lot of business from steel to cement, direct and indirect employment and is believed to be contributing in 5% of GDP. So the government should assign industry status to realty industry for easy financing from institutions. RERA, Smart city development, FDI and Housing for all etc. have boosted confidence among buyers and developers. After demonetisation, cabinet should allot a dedicated fund for infra and housing at easy rate of interest. Also home buyers buying homes upto 35 lakh could be offered special rate of interest.
Suresh Garg-CMD, Nirala World
The government should pay attention at compact level of taxation of REIT income, and for discount of capital gains for the developer at the time of transfer of property into REIT. The tax benefits for home buyers should be more relaxed since all banks are flooded with money. This could be more revised to comprise all home loans for first time home buyers. For home loan up to Rs. 30.00 lakh, govt. can propose interest rate 1 or 1.5% less to attract more end users under housing for all mission just like low cost housing. Tax benefit on paid interest could be increased upto double for first home buyers under Rs 50 lakh. This will become one of the key drivers to promote end-users to purchase and promote realty industry.
Chintan Sheth - Director, Sheth Corp
With a series of activities happening in the real estate industry, the budget 2017 will be a crucial affair for the realty market. There are huge expectations from the Government which is already making the right moves creating the perfect atmosphere for the industry. Firstly, the Government needs to put in place the 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.
Mumbai's realty market focuses on the mid and the affordable segment of home buyers. The Government can exempt Income tax for affordable homes built for economy weaker sections and low income groups. The reduction of service tax will take off huge load off the shoulders of home buyers as they are already loaded with several other taxes. We expect the Finance Minister to roll out special incentives for first-time home buyers in the affordable housing category which will help in trimming the financial burden on home buyers and further enhance their buying power. We expect 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.
We have a strong trust in Government which has played a vital role in the implementation of RERA along with the Benami Transactions Bill and have also taken a few stringent steps like demonetization. The RERA Act once implemented will boost the entire industry and will definitely prove to be a game changer for the market. The impact of this bill will be profitable to both consumers as well as builders as it will bring transparency in the industry and confidence amongst buyers. These moves by the Government will help to curb many inconsistencies and unfair trade practices bringing professionalism in the sector. Also, the Government needs to bring in control and stabilize raw material prices as they have a direct impact on final price of the product. Introduction of GST will help in curbing multiple taxes which is a positive sign for the industry and result in buyers coming forward to buy property. The realty market is growing at a steady pace and there is much more development which will take place if the industry expectations are met from the budget.
