While
the 2011-12 budget offered a mixed bag to the realty sector, developers believe
that very little was extended to them and customers and not enough steps were
taken to improve the significance of the housing sector.
“Even
today the Indian real estate sector has been facing its problems like slowing
economy, delay in decision-making process, and hike in interest rates,” says
Dhaval Ajmera, Director of Ajmera Realty & Infra India.
However,
the real estate industry remains optimistic and looks forward to some reforms
in the coming budget. The real estate sector is primarily looking forward to
the RBI’s intervention to control the inflation which has adversely affected
the industry. A sheer relief could be by bringing in affordable housing.
“We
expect revision in tax for affordable housing projects in order address the
acute housing shortage in the country,” says Shailesh Sanghvi, Director,
Sanghvi Group of Companies. Affordable housing should be considered important
with priority lending given to banks who could in return offer concessional
costs to keep the cost of tenements within the reach of common man.
“The
budget should look forward to extending the existing benefit of Section 80 IB(10)
of the IT Act for developing affordable housing as the country is still in a
huge shortage of tenement, adds Ajmera.
Last
year, a 1% interest rate rebate was provided for affordable housing costing
between Rs 10-15 lakh. Anuj Puri, Chairman & Country Head, Jones Lang
LaSalle India is of the opinion that the scope of this rebate should be
amplified and broadened to include a wider price band of budget housing so as
to boost the flagging sentiments in the housing sector.
Additionally,
Sanghvi is of the opinion that the interest subvention of 1% on home loans
could be raised from Rs 20 lakh to 30 lakh due to increase in cost of raw
materials and various taxes incurred during home buying. Additionally,
allocating more funds to the Rajiv Gandhi Avaas Yojana will do well to the real
estate sector.
The
real estate industry is also hoping to get an industry status as the sector is
a major driver for economic growth and generates countless jobs across its
various verticals. As the second largest employer in the country contributing
5% to India’s GDP, Indian Realty deserves a preferred treatment to give a
further boost to our economy. Industry status would help the sector to access
debt lending at more competitive interest rates and lower collateral values.
“Granting
the real estate sector an industry status should be acceded to in the
forthcoming budget as this would enable it to have access to organised funds
from banks and financial institutions. In addition to getting easier and
cheaper finance, the industry status would bring in a much deserved discipline
in this sector, especially when the government is giving priority to mass and
affordable housing projects,” says Manju Yagnik, Vice-Chairperson of Nahar
Group.
There
is a severe shortage of finance and whatever finance is available is coming in
at a huge rate which is fuelling the realty prices and also many a times makes
developers scrap the launch of new projects. The real estate industry also
expects the Finance Ministry to relax the norms on FDI and ECB, especially for
township projects which will give developers source funds at a much reasonable
cost.
“Relaxing
norms for repatriation of FDI in real estate is the need of the hour.
Currently, it is not possible for foreign investors to repatriate real estate investment
proceeds for a period of three years, which is hampering investment flow into
India. The market environment needs to be rendered more investment-friendly,”
says Puri.
Meanwhile,
an increase in infrastructure spending in urban areas with a view to unlock the
value of neglected and hidden land assets in suburban and peripheral districts
is expected.
“With
growing urbanisation in metros, the real estate sector is seeing huge
opportunity for creating newer townships. It is vital that the government promotes
townships alongside industrial belts and give developers fiscal benefits to
township development to entice developers in this segment, says Ajmera.
Additionally, clear guidelines should be announced by government in order to
avoid any kind of ambiguity on point of levying Service Tax on under
construction projects.
Finally,
Yagnik concludes that considering that nearly 35% of sale value of a home
consists of various taxes such as excise, VAT, service tax, stamp duty among
other things, “we hope that the Budget 2012-13 would bring about appropriate
reductions in their tax rates, to the delight of home-buyers who are already
burdened with high interest rate for housing loans”. Source: Economic Times
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