Rollback of TDS on Transfer of Immovable Property Will Provide Some Relief to Home Buyers

Developers And The Government Have Begun A Serious Dialogue To Redress The Issues Facing The Realty Sector,

The recent rollback on the proposed one per cent tax deduction at source (TDS) on transfer of immovable property by Finance Minister Pranab Mukherjee comes as a right step and is expected to offer some relief to homebuyers across the country, observe developers.
Although the finance minister’s announcement may not have anything to offer in terms of direct benefit to developers, it has certainly generated a wave of positive sentiment in the realty market. It will help home buyers reduce transaction hurdles, time and cost, points out Mayur Shah, MD, Marathon Group. “The reduction in TDS will also smoothen the resell and second sell transactions,” he says.
The rollback move would help generate positive trends, though in a limited way, in the real estate market, observes
Shailesh Puranik, MD, Puranik Builders Pvt Ltd. According to him, it’s a rational and helpful move as the TDS which discouraged buyers earlier will now be benefited from the withdrawal.
“This rollback of TDS will help buyers easily access property transactions. The rollback will also make a positive impact on redevelopment projects. This will also help in reducing the additional burden on the developers which is later on passed to the buyers. It’s a positive atmosphere now. TDS would only have escalated property prices and ultimately discouraged buyers,” he says. Earlier, the entire procedure of the TDS was complicated as the buyer had to provide personal details along with the property details and mentioning of the seller in the tax deduction form.
In the budget for financial year 2012-13, the finance minister had proposed to levy TDS on transfer of immovable property in a bid to tighten the screw on generation and the use of unaccounted money in the real estate sector. The TDS was issued on the transfer of all the immovable properties with a sale value exceeding above 50 lakh in urban cities and other rural areas with a property value of 20 lakh. However, developers feel that the government is already charging taxes in the form of service tax, VAT, among others, though the real estate sector is not a service
industry per se. So there was no point in charging any kind of additional tax in this regard, point out developers.
Says Diipesh Bhagtani, Executive Director, Jaycee Homes Ltd: “The recent rollback by the government is a good move though it may not have a drastic impact on the overall realty sector. However, if it was implemented, it would’ve certainly been a loss for a homebuyer.”
Of late, it seems that the government is taking cognisance of the woes of the realty sector, which contributes significantly to the GDP. Earlier, some relief was felt when the Reserve Bank of India (RBI) reduced interest rates for the first time in three years after raising borrowing costs by a record 375 basis points in 13 moves from mid-March 2010. The RBI lowered the repurchase rate to 8 per cent from 8.5 per cent on April 17.
Some developers, like Ajit Chordia, Director, Khivraj Tech Park, feel that although this (the rollback) is a step in the right direction, a lot more needs to be done. He says, “Consumers are definitely going to benefit from the move, as they do not have to go through the complex TDS process. That said, service tax (paid partly by the developer and partly by the buyer) has not been rolled back. A lot of such measures, if implemented, will help homebuyers.” Developers believe that the Centre must take pragmatic steps like easy loans at concessional rates of interest for homebuyers to help revive buying trends in the sector.

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