Want clarity on real estate regulatory bill and Smart Cities initiative.
Approval of the Real Estate Regulatory Bill that was deferred in the winter parliamentary session, fast-tracking passage of amendments to the Land Acquisition Act 2013, more clarity on the Smart cities initiative and faster project approvals. Hopes are high in the realty sector of some clarity on these issues in Budget 2015.
“As we move closer to Budget 2015–16, India’s real estate sector is hoping for some key expectations to get implemented. We are still awaiting the Ordinance with the latest amendments to the Land Acquisition Act, 2013, to be finally passed in Parliament. One hopes that the new Act will be implemented soon, together with more incentives for the low cost/affordable housing segment. More clarity is also sought on the Smart Cities initiative on monetary allocation, specific timelines, finalized locations and the broad plan of action,” says Anshuman Magazine, chairman & MD, CBRE South Asia Pvt Ltd, said.
Increase in interest deduction is yet another demand. “The housing sector has not grown in the last few years. An increase in interest deduction from ` 2 lakh to ` 3 lakh for self-occupied houses could be a welcome change, especially because people have taken higher loans. This may also have a positive impact on the housing sector as many people would be inclined to buy a house for their own living,” says Vineet Agarwal, Partner, Tax, KPMG.
Provisions for the affordable housing vision should also be firmed up in this Budget, say experts.” In the previous nine month Budget, the new government outlined its vision of boosting affordable housing. From the upcoming 12-month budget, the Indian real estate sector looks forward to provisions that firm this vision up on the ground,” says. Anuj Puri, chairman & country head, JLL India:
To make the government’s vision of Housing for All by 2022 a reality, apartments of or under 1000 sq ft. should be exempt from income tax Act 80I (B). By doing so, the benefits will be directly transferred to the customers, says RK Arora, chair man, Supertech Limited.
“The industry is also anticipating increased focus on urban infrastructure as well, along with taxation clarifications for Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) to begin functioning in the country,” adds Magazine.
Developers have been campaigning for a faster project approval process for good reason as this would speed up the supply pipeline, help bring prices down and also ensure that real estate remains viable as a business. The Budget should provide suitable relief on this front, while simultaneously ensuring that construction quality norms are not compromised in the process and that faster approvals do not result in support infrastructure failure in new precincts being developed. Tax incentives should be given for renting out residential properties. Currently, rental income is treated as normal taxable income. Providing tax breaks specific to rental income will give a significant boost to rental housing segment in the country, and help increase rental supply in the metros, says Puri.
According to Getamber Anand, president (elect), CREDAI and chairman and managing director, ATS Group, “Certain sections of the Income Tax Act like 43CA which imposes a tax on an assumed income if there is a disparity of purchase value and the circle rate needs to be scrapped immediately because the revenue departments of all state governments across the country have started increasing the circle rates very unjustifiably just to increase the revenue of the stamp duty collection. This has actually set back the entire industry because the home-buyer may be buying a flat at ` 50 lakh at a location and the circle rate is say ` 70 lakh, so he has to pay an income tax on `20 lakh which is like unearned income that the department assumes.”
A major demand of the real estate sector is industry recognition. Official recognition will eliminate many of the problems faced by the sector that contributes approximately 8% to the GDP, adds Anil Mithas, CMD, Unnati Fortune Group.