Indian Real Estate Market is waiting for the Union Budget 2016-17 with huge expectation. It is being hoped by all the stake holders of real estate market that this Union Budget will help in reviving the Indian property market by addressing some long awaited issues. Here we have tried to list out expectations of buyers as well as developers from Union Budget 2016-17 :
1. Increase in affordability : Buyers want effective interest rate be brought down to increase their affordability, while builders expect that issues like stamp duty on circle rates–even if they are higher than the market price and taxing the deemed rental income (which never accrued in real term) on unsold inventory of flats should be addressed.
2. Correction to the anomalies in the tax provisions : Under Section 43CA, property transactions are being taxed at the sector rates fixed by the government, whereas the market price is much lower. This has created a huge problem to buyers and builders. Under Section 22 of the I-T act, residential property is taxed on the basis of annual letting value, even for those properties which are held as inventory by developers.
3. Single window clearance system: Single window clearance system will not only reduce the procedural delays due to multiple level clearances for construction but will also increase the affordability of home buyers by reducing cost incurred in getting them. It has been estimated that approx. 25 per cent of the cost paid by the buyers accounts for various clearances and delays due to it.
4. Industry status for Indian real estate sector: Even after contributing approx. 7 percent to the GDP of India, real estate has still been deprived of industry status. Experts believe that if implemented, the cost of funding provided will come down significantly and in turn, benefits could be passed on to the consumers. In this way, it could benefit both consumer and developers.
5. Exemption limit on interest on home loan: : Property buyers of Indian Real Estate Market are expecting an increase in the deduction limit on interest of home loans. In present, a buyers can claim tax benefits of Rs 2 lakh after possession, only if construction is completed within three years. It reduce to Rs 30,000 only, if there is delay in construction. For first time home buyers, who are living on rent, its like additional burden. Things can be easy, if the construction time line gets extended from 3 years to 5 years and buyers could enjoy tax benefits not after possession but from the from the time they start paying interest on housing loans.
6. Real Estate Development and Regulation Bill passing and implementation: Real Estate Development and Regulation Bill, approved last year is still waiting for its implementation. Passing and implementation of bill will increase transparency & accountability and will boost buyers confidence. This regulation bill makes it mandatory for registration of all projects and real estate agents who intend to sell any plot, apartment or building with the Real Estate Regulatory Authority. Urban Development Minister M Venkaiah Naidu on Feb 12 expressed hope that the Bill will get passed in the upcoming Budget session.
7. Tax sops and Real Estate Investment Trusts(REITs): Dividend Distribution tax (DDT) has remained the biggest bottleneck in REITs, which has not yet started in India. There has not been a single REIT listing in India to date due to DDT ever since its announcement. Once kicked off, REITs can almost single-handedly revive the Indian real estate sector.
8. Benefit under Section 80 IA B to affordable housing : We would also like to reiterate our demand for “infrastructure status” to the Housing sector, it has been a long standing ask from real estate developers across the country, since by adding a clause to the definition of “infrastructure facility” to u/s 80IA of IT Act 1961.
9. Service tax exemption for residential housing: Exemption of service tax will no doubt help in price control in real estate market. 14.5 per cent service tax, that is finally passed on the end user, on its exemption will help in achieving dream of Affordable Housing in India.
10. GST Bill Passing and Implementation : While buying a house, in addition to the Stamp Duty and Registration Charges the buyers are liable to pay multiple taxes like ervice Tax, VAT, Excise Duty, Custom Duty and Entry Tax etc. on purchase of under-construction properties. This combines to form about 22-25 per cent of the total cost of the unit. By passing Goods and Services Tax Bill, the govt. can take a major step towards affordable housing.
Post By :
Alok Kumar Upadhayay