Budget 2018: Top 5 expectations of real estate experts

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Real estate experts are looking forward to the Union Budget 2018-19 for progressive policies that would bring a turnaround in the market sentiment. In addition to seeking industry status, they are expecting the formulation of a single window clearance system, rationalisation of GST, push to REITs and reduction in home loan interest rates.

The annual budget is one of the most awaited events every year. All industries wait with bated breaths to land with policies and reforms which would boost businesses. Real estate being no different, looks forward to this mega-affair for announcements which would boost investments in the sector. After a momentous 2017, which was embraced by path-breaking reforms like Real Estate (Regulation and Development) Act [RERA] and Goods and Services Tax (GST), this year is especially crucial for the real estate segment.

Pinning all hopes of a revival in sales and new launches on the upcoming budget segment, here are the five appeals that the industry stalwarts are making to the Finance Minister -

Industry Status – The demand for according ‘industry status’ to real estate remains unmet through years. Experts say, the move holds the potential to help the sector rise from the ashes of demonetisation. Access of funds at cheaper rates from institutionalised banks remains one of the major attractions for the developer community.

Single Window Clearance – The prime concerns in the sector – project delays and exorbitant prices – are directly linked to the long and tedious approval process. The introduction of RERA was expected to bring in single window clearance system across States. However, the failure to effectively implement this mechanism has posed further challenges towards developers who now have to operate under RERA regulations without having a faster approvals mechanism in place.

Rationalisation of GST – The unification of multiple taxes under GST was welcomed, until real estate was put under the 12 percent tax slab. The move has burdened homebuyers more than ever and resulted in a further drop in sales. Real estate experts appeal a reduction in GST slab for the sector and preferably include Stamp Duty and Registration Charges under the ambit of GST.

Ambresh Tipnis, Director, Shivalik Ventures opines, “In the ensuing Union Budget, the real estate sector expects some reduction in the GST which will benefit customers. Also, there should be some clarity for investors who have done the booking and want to resale the flat. GST at 12 percent is very high to absorb the losses.”

Further, RK Arora, Chairman Supertech Ltd says, “we need an abolition of stamp duty, which unfortunately continues to remain in force even after GST is implemented, leading home buyers to pay much higher than ever before.”

Push to REITs – While Real Estate Investment Trusts were introduced in India long back, the tool has failed to gain popularity owing to its long term capital gain holding period.

Sankey Prasad, CMD, Synergy Property Development Services, says, “To bring the investment opportunity in REITs at par with equity investments, government must cut down the long term capital gains holding period from three to one year.”

Home loan – “The government should lift restrictions and prove allowance on the entire interest of housing loan as a deduction for taxation purpose. This would fuel housing demand. Further, the housing loss set-off limit should be increased from Rs 2 lakh. The Budget 2018 should provide more incentives for the first-time homebuyers and developers who have been reeling the burden of RERA and general slowdown last year. It would be helpful if additional limit is set for the principal amount of the home loan, as the limit of Rs 1.50 lakh under 80C gets exhausted under regular investments like PPF, FDs, EPF, insurance premium and much more,” opines Shailesh Puranik, MD, Puranik Builders.

In addition to these five key expectations, real estate is looking forward to multiple tax incentives in order to boost investments from end users. Further, any incentives for development of affordable and green buildings are also believed to play an instrumental role in driving real estate to a growth trajectory.

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