NEW DELHI: Interim finance minister Piyush Goyal will present the interim Union Budget 2019-20 on February 1. This being the last budget of the current government industryexperts are expecting several provisions for the real estate sector.
Take a look at what realtors are expecting from the Union Budget 2019-20:
Sanjay Dutt, MD & CEO, Tata Realty
The stabilization of stamp duty norms across states will further help in reducing the misinterpretation through a simpler tax regime. We also believe that GST rates should be brought down to 5% which would lead to high incentive and thereby generate more demand in the industry. With unsold inventory still on a high, the reduced GST rate could help in the reduction of the same. We would also urge the Government to create a new fund that will help buy out stressed inventory in at least the six major cities or offer a tax concession for Asset Reconstruction Companies.
For the home buyers, the government should increase the income tax deduction limit for individuals on interest payment against home loans taken for acquisition or construction of self-occupied property.
Neeraj Sharma, Director, Grant Thornton Advisory
In 2019, industry status, rationalisation of GST and single-window clearance are top priorities for the real estate sector. Industry status will not only improve the credit availability of the companies operating in the sector, but also boost the overall sector image. Rationalisation of GST will make the cost of real estate more affordable for the end consumer and help push demand. While RERA has been able to plug some of the loopholes in the system, getting timely approvals still remain one of the biggest challenges, thus leading to delays in the delivery of projects/units to the consumers. Single-window clearance regime will help both developers and consumers as reduced construction time will translate into timely possession for homebuyers.
Anshuman Magazine, Chairman & CEO, India, South East Asia, Middle East & Africa, CBRE
In the past few years, the real estate sector in India has witnessed greater transparency and accountability with the implementation of various policy reforms such as RERA, GST and many more. This is reflected in India’s improved ranking in the World Bank’s Ease of Doing Business index.
The provision of REITs this year is likely to improve the quality of assets offered, leading to positive investor and consumer sentiment in the sector. Moreover, the clarity on the GST on under-construction houses will further provide an impetus to the realty sector.
Nimish Gupta, Managing Director-South Asia, RICS
The budget is expected to be having all the flavours of an interim budget but remain rational at the same time. The fact that despite the FDI in country growing in the past four years, the FDI in Real Estate and Construction sector has seen de-growth, is expected to be taken up seriously so that this business anomaly can be corrected.
Continued focus on Housing for all, driven by shortfalls in the targets in the run-up to 2022, is expected to drive further incentivization in the newer technologies to be brought in for expediting implementation of the vision. Additionally, a simple and efficient building approval process is essential in aiding the provision of appropriate property; especially in a country like ours where there continues to exist a huge housing shortfall which requires supply to improve and also as infrastructural facilities continue to be strengthened. With RERA in place, there are still hurdles that exist in seeking approvals. It is imperative that we realize that a shift from an excessively detailed and binding approval process to a single window mechanism – one that encourages the creation and diffusion of new knowledge based on sharing best practices and technology is essential for the on-going success of the real estate and construction sector.
Mathew Kurian Eranat, Assistant Vice President, ICRA
Real estate sector stakeholders will be looking forward to measures that will boost demand and lower costs for developers. Income tax benefits for home buyers, such as the deduction of available on interest paid on home loans can be expanded while also re-introducing additional benefits of Rs 50,000 on interest paid on home loans by first-time home buyers. Additional income tax deductions for customers of affordable housing can provide targeted support to this segment.
The government has been taking various measures to support the affordable housing segment; this can be continued by augmenting the current schemes and relaxing eligibility criteria. Further, the budget allocations for the CLSS scheme for the next year can be further augmented in line with the strong response witnessed, especially in the economically weaker section (EWS) / lower income group (LIG) segment.
Jaxay Shah, President, CREDAI National
Boosting farm incomes and adding job opportunities are the twin tests for Union Budget 2019-20. Real estate and construction Industry fits into the Budget 2019-20 scheme as the second largest employer after agriculture and contributor of close to 10 per cent of GDP. Alignment of GST and personal income tax so as to boost home ownership is a strategic option that Government may well consider exercising.
Madhusudhan G, Chairman and MD, Sumadhura Group
A rationalization of GST in real estate can help create a conducive business environment. Secondly, granting of infrastructure status to the entire sector along the lines of what was done for Affordable housing is another step we hope is taken. Last but not the least, an effective and structured implementation of single window clearance by central and various state governments would contribute significantly to streamline the process within the real estate industry.
Ankur Dhawan, Chief Investment Officer, PropTiger
Though typically governments do not change tax structure in interim budget, but this time due to improvement in direct tax collection government can provide some relaxation to middle class. Real estate industry will be expecting increase in tax benefits on home loan interest from 2 Lakh to 3 Lakh as well as modification in tax slabs to incentivise home buying.
H P Rama Reddy, Chairman, Reliaable Developers
Realtors yearn for an increase in income tax deduction limits for individuals who make regular interest payments against loans taken for acquisition or the construction of property. The tax deduction limit has recently witnessed an uptick – from Rs. 2 lakhs to Rs. 5 lakhs per annum; paving the way for a positive shift in the industry. This constructive change will fillip property sales, as it will help home buyers save significantly on home loans.
Sudep Singh, Chief Evangelista and CEO, GoWork
One major challenge that still remains is the angel tax. Many start-ups face the heat of clearing this outstanding amount from the funds, which keeps them from trying their hands at innovation at a consistent pace. Also, in order to enrich the Indian market, the rate of corporate tax, which is currently at 33 percent, should be reduced significantly. Lower rates of corporate taxes are one of the major factors that attract businesses to overseas markets.
Parth Mehta, Managing Director, Paradigm Realty
Despite no fault of developers, the real-estate continues to be beaten down due to financial turmoil in the economy and yet the developers are walking along a tight rope and continuing to construct despite of dried up sales, high receivable cycles and unavailability of credit from Banks/Financial Institutions just so as to match the RERA timeline and deliver homes to buyers. It is imperative for the government to revive this industry as it is one of the highest contributor to GDP and job creation.
To achieve governments vision of housing for all by 2022, the government has to incentivise real-estate developers by lowering tax burden on end buyers thus increasing dispensable income as well as relaxing provisions for developers under various implemented schemes & making construction finance available for the developers to complete projects within timeline submitted to RERA. We hope there is a revision in the GST on under construction houses from 12% to 8-5%, as the revised GST rate may bring brighter days in the industry.
Pradeep Aggarwal, Co-founder & Chairman, Signature Global
In the union budget 2019, we are expecting at least the double amount of fund which was allocated in the previous budget under the Prime Minister’s Housing Scheme. So that ordinary people can get the benefit of subsidy in home loan and more people can fulfil their dreams of owning a home. Apart from this, if the government reduces the GST slab in this budget, then it will have to pay attention to the input tax credit as well, otherwise it will be a direct hit on Affordable Housing as the house becomes even more expensive and will be away from the common man’s reach.
Manoj Gaur, Vice President CREDAI-National
GST’s inclusion in the country has allowed the developers to pass on the benefits of the input tax credit to the buyers. Bringing stamp duty and registration charges in the ambit of GST will be highly appreciated if the Budget addresses it. We expect this year’s interim budget to increase the income tax exemption limit under Section 80 (C) of the Income Tax Act, 1961 from the current Rs 2.50 lakh to at Rs 5 lakh, which will encourage people to go in for their own residential premises.