NEW DELHI: With eight days to go before the Narendra Modi government presents its interim Budget on February 1, the Prime Minister entrusted Railway Minister Piyush Goyal with ministerial portfolios of finance and corporate affairs till Arun Jaitley comes back from the US.
Jaitley underwent a surgery in the US on Tuesday. With doctors having advised him two weeks’ rest, Goyal will present the Modi government’s last and his first Budget on February 1,which comes less than 90 days before the Lok Sabha polls and could contain key announcements.
However, it will not be a full Budget.
The real estate sector has a long wishlist from the Budget. Here are the excerpts from some of them
Dhruv Agarwala, Group CEO, Housing.com/Makaan.com/PropTiger.com
“We do not expect any major new policy announcements for the real estate sector in the interim budget that would have a favourable impact on the sector. However, if the government considers increasing the tax deduction limit for housing loans, it would be a welcome development. Also, an increase in the tax exemption limit on personal income tax would go a long way in putting more disposable income in the hands of consumers, which would have a positive impact on the economy, which in turn would be good for the real estate sector going forward.”
Manoj Gaur, Vice President CREDAI-National & MD, Gaurs Group
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.
Pradeep Aggarwal, Co-founder & Chairman, Signature Global and Chairman, National Council on Affordable Housing, ASSOCHAM
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.
Deepak Kapoor, Director, Gulshan Homz
Rationalization of taxes would be the one most important factor that the real estate sector would expect from the upcoming interim budget. There should be an increase in the volume of rebate or comfort, which one receives while taking individual housing loan. With union budget, realtors are looking forward to bring the abolishment of TDS into the consideration which is deducted for the transfer of movable properties and is a very tedious process. If immediate abolishment of TDS does not seem possible then the government should either get an alternate way or increase the limit up to Rs 1 CR. We welcome all the measurement by the government in order to increase the flow of money into the sector because real estate provides employment to a large section of the population. If liquidity comes into the real estate sector then it would be an improvement for entire economy of the country.
Nakul Mathur, MD, Avanta India
To overcome the impact of reforms like GST, RERA & demonetization, this time expectations are high from the government. We are hopeful that the interim budget would encourage, strengthen & improve the real estate sector and will also pick up pace in GDP growth. Also Real Estate Investment Trust is yet to be listed and tax reforms for REITs must be thought about as well, considering its long term benefit for the sector and country.
Gaurav Gupta, General Secretary CREDAI-Ghaziabad & Director, SG Estates
Real estate sector has modernised today with the concepts of green building taking over. Interim budget 2019-20 must address about providing special incentives to the developers and projects which are offering eco-friendly concepts. This will greatly promote green building concept amongst the developers and help environment as well. Also, Single Window System in real estate sector should be executed across the nation so that timely execution and delivery of projects take place. This budget must also aim at increase the present savings limit so that the young population of the country gets a higher spending power and look at real estate sector as an investment avenue.
Kushagr Ansal, President CREDAI Haryana & Director, Ansal Housing
This interim union budget the government must ensure necessities for the upbringing of tier 2 and 3 cities along with decisions for infrastructural development and strategic connectivity between them. With the saturation of metro cities due to the lack of land availability and high prices, tier 2 and 3 cities must be next in line for urbanisation. Apart from this, any relief towards the personal income tax or increase in savings cap will bring about a cheer and improve the market sentiments that can be fruitful for the realty sector in near future.
Kamal Taneja, MD, TDI Infracorp
There are many positive policy making and initiative taken by the Government towards cleaning up and regulating the sector, but still several policy related issues needs the attention which can make a decisive difference. Long-time pending single-window clearance which can significantly reduce the overall projects cycle time needs to be addressed.
Prateek Mittal, Executive Director, Sushma Group
In the union budget 2019, we expect the government to raise the allocated fund under the Prime Minister’s Housing Scheme to at least double the amount set under last year’s budget. Apart from this, the government should 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. Hence, the relaxation in the income tax slab will enhance the purchasing power of home buyers who are keen on having their own house and working hard for it.
Also, even after being a key contributor to India’s GDP and the fourth largest employment generator in India, real estate sector has not been granted the Industry status. Providing an Industry status will enable the developers to raise funds at lower rates which in turn, will result in the reduction of project costs.
Dhiraj Jain, Director, Mahagun Group
The Union Budget 2019-20 holds immense significance as it will be the last budget to be presented before general election. Being one of the core sectors of the economy, real estate sector is still awaiting to be granted an industry status. Section 80EE provides a deduction of Rs. 50,000 for the first time home buyers if the property is not above Rs. 50 lakhs, irrespective of the size or location. We expect this year’s Budget to increase this tax limit or increase the limit of property value so that savings on taxation gets increased and real estate sector becomes an important investment option for buyers.
Ashok Gupta, CMD, Ajnara India Ltd.
Looking at the upcoming election in mid of this calendar year, the feelers doing the rounds indicate that the interim budget is going to be more beneficial for the poor & middle segment citizens in the country. The government will hopefully look into getting industry status to whole real estate sector. It has been a long pending wish of the developers that will help in gaining access to finance at a much lowered cost, thereby making the sector more affordable.
Vikas Bhasin, CMD, SAYA Homes
We urge the government to do away with regulation [Section 23 (5) of IT Act] on taxability of unsold property, which is held as stock-in-trade and not let out as the provision put avoidable pressure on developers/promoters who are facing a sluggish market. We are also expecting the CLSS budgetary support for both Economically Weaker Section (EWS)/Lower Income Group (LIG) as well as Middle Income Group (MIG) should be doubled so that more home aspirants can purchase their dwelling units.
Babita Singh, Chief Sales Officer, Paramount Group
We demand that the scope of Section 54 should be expanded and the capital gains tax exemption should be given even if the sales proceeds are used to acquire more than one property. This will encourage investment in the housing sector.
Harvinder Singh Sikka, MD, Sikka Group
We would expect the government to bring into incorporation the stamp duty in the sector within the range of GST. The various subsidies provided under the government policies have been of great assistance in healing the realty market, but still some factors including the Single Window Clearance and the status of Industry to the real Estate sector needs heed to make a significant and positive change for the market.
Rajesh Goyal, MD, RG Group
Coming up with the status of Industry for the real estate sector is highly banked on with the Union Budget 2019-20. This step will not only help in approaching finance at a much lowered rate, but also reduce the cost of the projects bringing about a boost in the realty market. Moreover to procure more investment in the housing sector, the scope of Section 54 to be expanded and the capital gains tax exemption should be specified.
Amarjit Bakshi, Chairman & Managing Director, Central Park
“Considering the last few strong budgets, the upcoming interim budget is expected to ensure stability and growth for India Inc.
Currently, the Goods and Services Tax (GST) for under-construction property or ready-to-move-in flats would give the real estate sector a fillip if reduced to 5 per cent from 12 per cent. Government’s ‘Housing for All’ would gain significant momentum this year in case more incentives are announced in addition to the Credit Linked Subsidy Scheme (CLSS).
Real estate has been one of the key contributors to GDP and the fourth-largest employment generator in India. We are hopeful that the Government will understand the long standing need to accord industry status to the real estate sector which would help in overall growth of the sector as developers will be able to raise funds at lower rates.
Though RERA has paved the foundation for a more organised and trustworthy mechanism in the sector, the provision of single window clearance at state level will go a long way in saving considerable time and improving the overall efficiency of the real estate sector.”
RK Arora, Chairman, Supertech
“The Indian real estate sector is one of the most important for the economy, contributing as much as 6-7 per cent to the GDP in 2017 and is expected to contribute about 13 per cent by 2025. The government has been focussing much on the sector over the past few years to ensure that the target of housing for al by 2022, India’s 75th anniversary as an independent country. However, much needs to be done. While GST reduced the multiple taxes and complexities in real estate transactions, the stamp duty remains. This must be removed as is the case for most other industries.
Another request we have is that the real estate sector be given industry status. The growth of the rea estate sector is one that has a ripple effect on many other ancillary industries. The sector was one of the worst hit after demonetisation and has only just started to recover. The change in status make it easier for developers to raise funds at lower rates. The cost of capital is a major problem at this time and a reduced cost of capital would impact overall project costs and costs to buyers. We also hope that the government reduce the GST rate applicable to housing as that would be the ideal boost that is much needed by the industry. “
Amarjit Bakshi, Chairman & Managing Director, Central Park
“Considering the last few strong budgets, the upcoming interim budget is expected to ensure stability and growth for India Inc.
Currently, the Goods and Services Tax (GST) for under-construction property or ready-to-move-in flats would give the real estate sector a fillip if reduced to 5 per cent from 12 per cent. Government’s ‘Housing for All’ would gain significant momentum this year in case more incentives are announced in addition to the Credit Linked Subsidy Scheme (CLSS).
Real estate has been one of the key contributors to GDP and the fourth-largest employment generator in India. We are hopeful that the Government will understand the long standing need to accord industry status to the real estate sector which would help in overall growth of the sector as developers will be able to raise funds at lower rates.
Though RERA has paved the foundation for a more organised and trustworthy mechanism in the sector, the provision of single window clearance at state level will go a long way in saving considerable time and improving the overall efficiency of the real estate sector.”
Khushru Jijina, Managing Director, Piramal Capital & Housing Finance
Indian Real Estate accounts for 6% of the GDP employing close to 18% of the workforce and supporting over 350 industries such as cement, paint, steel, etc. The credit crisis within NBFCs delivered a major blow to this sector significantly paring its access to funds. Global financial crisis of 2008 was a costly lesson on what it means for a real estate sector to be out of control. The Government needs to take aggressive measures, albeit temporary, to mitigate stress in FY20.
To stimulate housing demand in FY20, the budget should aim at policies to reintroduce income tax deduction on principal and interest on a second home loan. In addition, Income tax deduction limit on interest paid should be hiked to Rs 5 lakhs especially in Tier 1 cities. Similarly, IT deduction allowed on principal paid should be increased. The policies should also be aimed at increasing ease of doing business for developers by rationalizing tax structure with a uniform GST preferably lower than 12% and merging stamp duty into GST and stimulus package for major developers should be rolled out and delivered through major NBFCs.
H P Rama Reddy – Chairman, Reliaable Developers
As we near the end of a financial year, we look forward to the budget with great anticipation as it plays an integral part in all our lives. Similarly, the real estate sector, which is key to overall development of a country, has its expectations from the government. Real estate is a crucial sector in India and it contributes to a total of 6-7% of the GDP while generating a handsome amount of employment opportunities in the country. Realty in India currently provides livelihood to over 50 million people residing in the country and is expected to witness dynamic growth in the next four-to-five years.
However, over the last 2 years the Indian real estate has witnessed some dynamic reforms hitting the sector which has elicited mixed results for the sector. While, demonetization substantially slowed the sector by reducing the cash flow in the economy thus reducing the purchasing power of the consumers; the RERA ACT strengthened the consumers footing. On a macro level, the industry needs more stable and consumer friendly policies which will strengthen demand and boost the sector further. Introduction of the GST, capital gains tax, stamp duty et al have hampered the perception of the consumer towards the sector. It would thus, not be wrong to say that an additional tax rebate would help raise the confidence of the new home buyer. Further, multiple tax elements on purchasing a property like GST, registration, stamp duty etc., further increase the cost of the property resulting in consumers stalling their purchase decisions. Tax rebates on this front will help the sector immensely.
Realtors also 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.
Real estate developers want rationalization of GST for properties that are already under construction. Post GST implementation, the Goods and Services Tax has risen to as much as 18%, discouraging home buyers and investors while stunting profit margins. The ideal slab concluded by realty players is 12%.
Last but not the least, every realtor’s vision, coincides with the Government’s initiative to deliver ‘Housing for all by 2022’. The demand for affordable housing is increasingly becoming one of the fastest growing campaigns in the country. However, although the demand is huge, the multiple hurdles attached have left developers hesitant to enter this segment. The execution for this initiative has been considerably slow. Overall progress will depend on ramping up existing urban infrastructure and fast-tracking regulatory approval procedures. It is important to remove these roadblocks in order to attain the potential growth in real estate and ensure that the government’s goal, ‘Housing for all by 2022’, is attained.
The above mentioned pointers if adopted in the budget 2019 will helps address the sectors pangs given the high intensity dynamism it has witnessed in the last 2 years, making it easy to operate and serve better to both the community and the economy as a whole.
Ashwin Reddy, Managing Director, Aparna Enterprises Ltd.
We are expecting a thorough examination and revision of GST rates of building materials. Rational and uniform GST rates should be brought to the forefront. For instance, cement is placed at 28% which exorbitantly high for retail consumers. The government should think of segregating the rates for a B2B consumer and a normal B2C consumer.
The government has recently hinted that all the building materials will be brought to a 5% GST slab. If the proposal is really executed, it will bring a big transformation to the construction sector. This will also ease the burden from the small traders. If this revision can be followed with other building materials such as sanitary ware, insulated wire and ceramic tiles; a reduction in GST on building materials will help consumers to go for housing at good budgets without burdening themselves.
The existing Pradhan Mantri Awas Yojana scheme has to be made little more flexible for rural areas and semi-urban areas. The government should introduce slab systems in terms of tax incentives in such areas. The dream to own a house is still elusive for certain segments and it’s up to the government to revise its tax structure for first-time homeowners.
The government should also plan to invest more in the infrastructure. This will not only attract investments but also boost construction and building materials industry in general. Finally, the government should introduce flexible income tax incentives for the affordable housing industry, thereby reducing the indirect financial burden on buyers.