Search This Blog

Sunday, January 29, 2017

Top 10 expectations of real estate sector from Budget 2017 - Times of India

Real estate industry has high expectation from the upcoming budget 2016-17. Stakeholders are demanding that central government gives relaxation inincome tax rate, provide clarity on GST, raise House Rent Allowance (HRA) deduction and announce policies to standardize construction materials in order to uplift thereal estate industry.



Take a look at some of the major expectations that stakeholders have from the upcoming Budget 2016-17:



Industry status

Directly or indirectly, the real estate sector contributes to over 15% of India's GDP. It has been asking for industry status for quite some time now. In its absence, developers are forced to borrow at high interest rates and comply with a stringent evaluation process. Unavailability of funds at a reasonable rate of interest delays the construction process and increases the final cost of homes, negatively impacting the end consumer.


Giving industry status to the entire real estate sector, instead of granting infrastructure status only to the affordable housing segment, would help in pushing the housing demand in India.



Single window clearance

For the real estate sector to really grow and execute its projects on time, various government approvals should be given in a timely manner. Developers have for long been demanding single window clearance to remove bureaucratic delays, which in turn delay delivery of homes.



Clarity on beneficiaries under PMAY

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?



Financial protection from project delays

The deduction on interest of self-occupied houses is capped at Rs 2 lakh. 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. 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. To provide them some relief, the government may consider allowing interest deduction in such cases without the cap of Rs. 30,000, and from the year in which the possession was due to the buyer as per the terms of the agreement.



I-T sops 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.



Simplified tax norms for REITs

We have not seen a single REIT listing till date because of the presence of multiple taxes. Until tax hurdles are removed for developers and asset holders, it is highly unlikely that we will see any REIT listing. The government should recognize the capacity of REITs to improve market conditions for the real estate sector and remove the policies constraining their growth. The government should look at:


Reduced level of taxation of REIT income

Waiver of capital gains for the developer at the time of transfer of property into REIT

Removal of service tax on lease premises



Higher tax saving on home loan & home 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.

with thanks : TOI : LINK

3 comments:

  1. No doubt www.flourishingproperty.com is one of the best growing real estate company those who providing best real estate advisor. The company is providing fresh property information as well as resale property information any where in India or out of India. But there are lots of more companies are also available those who working in same industry. they are also providing same information regarding rental apartments/flats, new property information and resale property information. Recently launched new residential and commercial property in Noida and Gurgaon. some of these are:
    Urbtech Xaviers, Supertech Capetown and Mahagun Mezzaria

    ReplyDelete
  2. Check out this site to find out GST Rate, click here GST Rate Finder

    ReplyDelete
  3. Interesting article, Everything is going digitally n Buying home online
    which is incredible.

    ReplyDelete