Developer’s expectations from union budget 2016-17
The real estate developers are hoping that the forthcoming union budget 2016-17 will bring major announcements in terms of single window clearance; industry status to real estate sector; infrastructure status to housing sector; exemption limit on Interest on home loan; service tax exemption for residential housing and many more. The Finance Minister Arun Jaitley will present union budget for the financial year 2016-17 on 29 February. Let’s see what the expectations of developers are: Manoj Gaur, President, CREDAI NCR and MD, Gaursons India Ltd. said: “We are pinning lot of hopes on the upcoming union budget 2016. Getting infrastructure status has been long pending demand of real estate sector and this time too we expect that the sector be given infrastructure status so that developers can avail finances at cheaper rates from financial institutions. Also we are eagerly waiting for single window clearance system so that approvals are given in a pre-defined timelines furthermore bringing transparency in the overall working system. Slashing down the prices of products of allied construction industries like cement, steel and other building materials is also necessary for bringing down the overall cost of construction. Passage of Real Estate Regulatory Bill and GST is also one of the areas where budget needs to focus on. We also expect that there should be simplification of taxes. REITS should be exempt from taxes on rent, stamp duty, transfer of assets and distribution of dividends so that these trusts become efficiently functional. We also seek doing away with the provisions that makes it mandatory for transactions to happen at minimum circle rates ascertained by the competent authority.” Prashant Tiwari, Chairman Prateek Group said: “We are expecting that government focuses on providing finance to real estate sector at reduced costs and on the other hand also create an atmosphere where approval mechanism is faster. We are looking forward that REITs are made more investor friendly by reducing the burden on investors. We have been pressing hard that real estate sector gets the industry status. The long pending demand for clearance of GST should also become a reality now". Deepak Kapoor, President CREDAI Western U.P. said: “In the coming budget we have few basic demands. One of which is giving the industry status to the real estate sector. If we are provided the industry status than what we expect is that like other industries, cost of funding to this industry will be competitive and benefit will go to the customers. Our second important demand is the single window clearance system so that we can fulfill our promise of on-time delivery. Single window clearance has been a dream but if cleared it would bring dedicated authority with great influence on speed of getting clearances because delays eat away the profits and customer confidence. Real estate need to be incentive one and more open. In terms of financial instruments what we expect is that long term capital at much lesser interest rates should be made available to this industry. Government has also eased FDI norms which if implemented in a proper way, lot of positive changes will start happening. With a real estate regulator, realty sector would go in a maturity phase bringing positive outcomes which is the need of the hour.” Gaurav Gupta, General Secretary, CREDAI Raj Nagar Extension said: “In the coming budget we are hopeful that the government will help facilitate easy financing and address the housing problems to a large extent. The single window clearance system would help developers to complete projects on time as speedy approvals can be availed which eventually would help in timely execution of projects. We are looking forward for the passage of Real Estate Regulatory bill which would boost customer confidence and will help in building good bonding between builders and home buyers. We are very glad that interest rates have been brought down to a great extent last year and we hope that the rates do not go high again so that customers remain operational in the market.” Om Chaudhry, Founder & CEO of FIRE Capital and Chairman & CEO of Astrum Value Homes said: “With union budget round the corner we are expecting that affordable housing and cheaper home loans remain the top priority. Section 80 IB (10) which allows 100 percent tax exemption on housing projects with a certain limit of built up area should bring affordable housing under it. We are also demanding tax sops for affordable housing which will further boost the real estate market. Affordable housing is a fragment where government should implement tax free status for builder community which was previously offered. We are again insisting that real estate sector should be given the industry status so that liquidity issues faced by developers are resolved to an extent and would additionally help in attracting more FDI in real estate sector too.” Sanjay Rastogi, Director, Saviour Builders Pvt. Ltd. said: “After months of slowdown, realty sector is on its way to recovery and it’s very important that it gets the necessary impetus through the forthcoming budget. Government needs to focus on growth incentivized reforms and policies to support the sector. Tax norms should be revised so that REITS become more attractive as well as flexible further giving boost to the investment in real estate market. Speedy passage of Goods and Service Tax is something which is being looked with lot of hope as it will replace numerous taxes with single tax, helping the customers in a big way.” Anil Kumar Tulsiani, CMD, Tulsiani Constructions and Developers Pvt. Ltd. said: “Considering the slowdown in demand for properties in real estate market, we are expecting tax sops for affordable housing and restructuring of loans as well. We are hopeful that government formulate policies with a plan for next 7 to 10 years where demand for houses and urbanization can be met efficiently. The budget can make real estate industry more investment friendly by introducing a revised tax code. If GST clears in this budget session numerous taxes payable by home buyers will be eliminated getting replaced by a single tax. We are optimistic that this budget will bring good news for the real estate sector.” Amit Modi, Director ABA Corp and Vice President CREDAI Western UP: “We are hoping that the forthcoming Union budget 2016 will bring major announcements in terms of improving investment and taxation climate in real estate sector. We are looking forward for the following reforms from the budget 2016. Single window clearance: At present the multiplicity of permissions and approvals that developers are required to secure and the lack of single window clearance, it could take anywhere from 18 months to 36 months before beginning any project. The biggest delays in delivery of houses occur due to delay in approvals of projects and authorities have a major role to play in. An online single window clearance with bare minimum human interface and precise deadlines for approvals will not only bring down the deliveries of the project by at least 3 years but also the cost of the project by at least 15% which can further be passed on to consumers. Going online will also boost transparency and curb any scope for undue gratification in granting permissions, so in case any project needs to be put on hold or denied permission, an online system could clearly mention the reasons for this. Industry Status to Real Estate Sector: Delay in according an ‘industry status’ to the real estate, does not make it easy for the sector to avail of legitimate finances from Banks and other financial institutions. Imagine if clean low cost loans could be obtained from the system, then the cost benefit vis-a-vis high interest loans from outside the system can be passed on to the consumer. Infrastructure Status to Housing Sector: We would also like to reiterate our demand for “infrastructure status” to the Housing sector, it has been a long standing ask from real estate developers across the country, since by adding a clause to the definition of “infrastructure facility” to u/s 80IA of IT Act 1961 Exemption limit on Interest on Home loan: On the personal taxation front the government should raise tax deduction limit for housing loans up to 5 Lakh from present limit of 2 Lakh per annum, a Rs 2 lakh limit may seem fine for a Rs 20 lakh house, but for Tier 1 cities where housing starts from a minimum Rs 50 lakh house, there present exemption is negligent. A similar limit should also be set for principal loan repayment from Rs 1 lakh at present, which would have had a positive impact on encouraging purchase of homes, especially by the millions and millions of first time buyers across the nation. Service Tax Exemption for Residential Housing: Also to aid millions and millions of first time buyers to realize their dreams, we believe that the residential construction should be taken out of 14.5% service tax net in the first place and this exemption should cover the builders and developers who are registered. Since the entire tax burden is finally passed on the end consumer, it will be the end consumer who will be the beneficiary at the end of the day, in addition this is also an extremely important step to achieve the Prime Ministers dream of “affordable housing” in the country.”
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