While the new Government is all geared to set the ball rolling with its first Union Budget on July 5, 2019, realty experts are pinning for reforms that will uplift the present status of the industry. Hopeful of positive developments ahead, here is what the industry players are expecting from the Upcoming Budget 2019.
At present, when the new Finance Minister Nirmala Sitharaman is holding pre-budget consultations with the representatives of varied sectors, real estate experts are waiting with bated breath to see what is in store for the industry ahead. The sector, which has been reeling under the pressure of liquidity crisis since long, has pitched for increased bank funding to the developers. Additionally, clarity on the taxation front, reduction in the interest rate for both developers as well as the homebuyers, extension of Input Tax Credit (ITC) to the commercial sector, reduction of corporation tax, and enhanced tax sops for the investors are some of the other major reforms that the players are looking out for. With respect to tax benefits for the homebuyers, the industry is hopeful of add-on benefits by way of reduction in the tax slabs.
As opined by a majority of the real estate experts, the Budget should help in providing a conducive environment for macroeconomic goals and enhanced governance. Additionally, the new policies are likely to foster economic growth by providing stimulus to the real estate sector.
Here is what some of the industrial experts have to say:
Niranjan Hiranandani, President, NAREDCO
The expectations of the industry revolve majorly around addressing the present liquidity crunch. At present, the liquidity issue is taking a huge toll on the health of the companies and further inflicting financial damage. Quick corrective steps should be undertaken by apex bodies and the government to pump in enough liquidity in the system. This is to bring back economic growth on the right track. Further, there is a need to rationalise taxes by subsuming stamp duty in GST along with the extension of Input Tax Credit to the commercial segment, abolishing of Minimum Alternate Tax (MAT) to provide thrust to the development of Special Economic Zones (SEZ). Another most imperative expectation is to frame the National Rental Housing Policy in order to meet the target of housing for all by 2022. In addition, we expect improvisation in the Ease of Doing Business to grant quick approvals under one roof and avoid any further delay and discrepancies.
Manju Yagnik, Vice Chairperson, Nahar Group
We expect the realty sector to witness a complete revival post the announcement of the Budget 2019. Furthermore, we expect the budget to be a healthy mixture of everything and assure economic and financial growth. There is a need to increase the financial limits extended to the developers in order to solve the current liquidity crunch faced by the industry. Also, it is crucial to develop a stronger infrastructure for profitable incentives to be instilled into the sector. Additionally, reduction in the housing rates will provide major tax relief and benefits to homebuyers and investors alike. Real estate being a significant contributor to the economy, needs a multiplier effect for efficient economic growth.
Rohit Poddar, Managing Director, Poddar Housing and Development
The economy needs urgent impetus and revival of the real estate sector. A significant reduction in the interest rates will spur a drastic improvement in the existing liquidity crisis and will ensure monetary flow in banks and Non-Banking Financial Companies (NBFC). A clear road map for regulations is needed and further corrective measures should be taken to rationalise the Goods and Services Tax (GST). It is expected that further job creation will take place with increased consumption and economic revival.
Ashok Mohanani, Chairman, EKTA World
The budget majorly requires discussing the key issues of high unemployment rate, challenges such as the NBFC crisis and Agrarian crisis. According to the previous budget, the Government had decided to emphasise more on enhancing the overall infrastructure, connectivity, and transportation, which reflects the Government’s proclivity towards providing a sustainably developed environment. There is additionally a need to relook at the tax structure to reduce the burden and increase disposable income. This will further enhance liquidity in the market.
Amit Ruparel, Managing Director, Ruparel Realty
In the upcoming Union Budget announcement, we are hopeful that the Finance Minister grants infrastructure status to the housing sector which will be encouraging for the developers. This will ensure further access to institutional credit and aid in reduction of the developer’s cost of borrowing for affordable projects. It will further reduce the approval processes and increase transparency in the sector. Furthermore, it will be an ideal situation if GST is revised for construction materials such as cement. Having single window clearance is what we look up to further.
Rohit Kharche, Director, Baya Company
The first five years under the former government have truly been dynamic with a concentrated focus on infrastructure development. Consequently, urgent and equal attention to the real estate sector is needed in this term. With the sector facing tremendous difficulties in the recent past, government intervention to address the liquidity crunch that the sector faces today is critical. Additionally, aid in terms of making capital available to the industry, reduction in interest rates for developers as well as homebuyers, and clarity on the taxation front would go a long way in bringing stability to the sector. Moreover, grant of industry status to the real estate sector along with steps being taken in the direction of single window clearance under ease of doing business will further help the sector.
Parth Mehta, Managing Director, Paradigm Realty
The reality of the real estate sector is amidst trinity of worst three facts including increasing input cost due to abolishment of ITC and exorbitant development premiums, excruciating liquidity crisis due to NBFC defaults and rising Non Performing Assets (NPA), and piling up of unsold inventory due to weak consumer sentiment on the back of high unemployment. It is one of the worst phases for real-estate as an asset class. Hence the wish list of the sector is long. This majorly includes that were left ignored in the interim budget. The NBFC fiasco and overall credit crunch of the banking system had a domino effect on the viability of real-estate projects because of access to construction finance and exorbitant rates of borrowing.
Kamal Khetan, Chairman and Managing Director, Sunteck Realty Limited
With the old government back in power, we expect a spur of reforms and impetus to the real estate sector to accelerate the growth of GDP. We anticipate the vision of Housing for All by 2022 to be on the forefront in this year’s budget. This will help to ease the pain of the real estate sector and will fix many ancillary problems marring the economy currently. Massive employment opportunities and a thrust to the slow demand cycle are some of the immediate benefits that the economy will reap from the reforms.
Rituraj Verma, Partner, Nisus Finance
The industry has high hopes from the upcoming budget 2019. Revival package for NBFCs, Special incentives for redevelopment from Finance Ministry, New tax on vacant land, reduction in capital gains tax for real estate, and relaxation in FDI norms are some of the significant reforms that the experts are looking for.
Pradeep Aggarwal, Co-Founder and Chairman, Signature Global
In the union budget 2019-20, we expect the Government to double the amount of fund allocation for Pradhan Mantri Awas Yojana (PMAY). This will enable more people to realise their dream of owning a home and also help the Government in achieving the goal of Housing for All by 2022. The Finance Minister will have to pay attention to the Input Tax Credit as well; otherwise it will adversely impact affordable housing, which will eventually become expensive for the common man. Apart from this, the Government should also reduce GST on building materials such as steel, cement, and contractor services.
Manoj Gaur, Managing Director, Gaurs Group
We wish the Government to re-introduce Input Tax Credit in GST, which has been withdrawn recently. With the input tax credit benefit, the property prices will remain under control. Also bringing stamp duty and registration charges within the ambit of GST will be highly appreciated if the Budget addresses it. We expect this year’s full-budget to increase the income tax exemption limit of the Income Tax Act, 1961 from the current Rs 2.50 lakh to Rs 5 lakh, which will encourage people to go for their residential premises.
Amit Modi, Director, ABA Corp
The real estate sector in India entered a revitalisation mode during 2018. The teething problems posed by various regulatory reforms such as RERA and GST have finally started to settle and have started to weed out inefficiencies from the sector leading to an era of transparency and accountability. As the industry is coming to terms with these unprecedented reforms, it will be compelling to see how a strong and stable government will reflect on fueling the growth of the industry through the forthcoming Budget. Single-window clearance for realty projects, increase in the limit of tax deduction for housing loans and allotment of industry status to real estate are some of the reforms that we are looking for.
Ashish Bhutani, CEO, Bhutani Group
We expect the Government to come up with some positive developments for the sector. A vital reduction in the interest rates will spur a drastic improvement in the existing liquidity crisis and will ensure money flow in banks and NBFC's. Also, a clear road map for regulations is needed ,and further corrective measures should be taken to rationalise the GST.
Ashok Gupta, CMD, Ajnara India
There is an urgent need for the Government to support the developers. We are eagerly looking forward to the allocation of industry status to the real estate sector. Additionally, steps in the direction of single-window clearance under Ease of Doing Business will tremendously help the industry.
Nesara B S, Executive Director, Concorde Group
The real estate sector is at the cusp of a transformation in India. The Government has been swift in introducing and implementing striking measures that have enhanced transparency within the industry. Going ahead, the Government should enhance the eligibility criteria for the benefits under the PMAY scheme. The unit size to price ratio of affordable housing too needs to be re-examined, especially across the Tier-1 cities. Imminent headwinds emanating from the rising risks of NPAs and the NBFC crisis are impacting liquidity; thereby reducing the margins due to increased input costs. These are some of the systemic risks that we expect the government to address. The introduction of REITs has been a welcome move. However, the instrument needs to be proliferated more widely to unleash the latent value in the sector.
Gururaj Bhat, CFO, Karle Group
We would like to witness a reduction in the GST rates applicable for cement along with the extension of concessions towards housing loans between Rs 50 lakh to Rs one crore. Further, setting up of more Special Economic Zones (SEZ) units will help in narrowing down the current deficit, which is getting enlarged yearly. The SEZs, at present, are generating ample employment opportunities and are the major contributors of foreign exchange for the country. An extension of tax benefits for SEZ by five more years will accelerate the economic growth of the country.
Varun Manian, Managing Director, Radiance Realty Developers Limited
The real estate sector is one of the predominant growth drivers of our GDP. We believe that this time, the Union Budget would have a positive impact on the sector with adequate measures to re-energise the sector. The list includes simplified and unified GST, permission to PSU banks to extend credit to developers on merit, earmarking RERA approval timelines, singular definition of affordable housing for interest subvention, and direct FDI into residential projects.
Parag Kulkarni, Managing Director, A O Smith India
Residential real estate is one of the key sectors which we believe needs quick redressal. The forthcoming budget is expected to provide a much-needed fillip to the sector via adequate measures for residential realty.
Uddhav Poddar, Director and CEO, Bhumika Group
In the forthcoming budget, we expect the government to focus on infrastructure development of Tier 2 and 3 cities to make these cities ready for the next round of urbanisation. We also expect to have the much-awaited industry status for the real estate industry along with a dedicated fund for financing the real estate projects.
Harinder Singh Hora, Managing Director, Reach Group
Granting of industry status has been a long pending demand of the real estate sector. The decision will lower the overall cost of funds for the industry, which would benefit both investors and end-users. It is expected that the government should maintain fiscal prudence as it will help to reduce the interest rates and give a boost to the economy. Further, it is imperative that the government should bring more clarity towards input adjustment in GST. Right now, the sector is going through a phase where many buyers are in a wait-and-watch mode.
Prateek Mittal, Executive Director, Sushma Group
After a slew of reforms which were aimed at bringing transparency and increasing the faith of the buyers in the real estate sector, we hope that the government will further work with the same zeal. We hope that the long-pending demands are also met this time including the grant of industry status to the sector, and single-window clearance. We also hope that there will be some relaxation in the income tax, which will help the masses to save money which can be utilised to fulfil their dream of buying a house. We also look forward to adequate ways to cut down the EMI burden of the homebuyers.
Anupam Gupta, Sales and Marketing Director, GBP Group
The government took some significant steps for uplifting the real estate sector in the Interim Budget. In this budget as well, we expect the government to undertake favourable steps to aid the developers as well as the homebuyers. We expect the government to take steps to curb the existing liquidity crunch and to reduce the interest rates to ensure the flow of money in the banks and NBFC's. Also, we expect the government to simplify the cumbersome process of approval through single window clearance.
Dhiraj Jain, Director, Mahagun Group
The Union Budget 2019-20 holds immense significance as it will be the first budget to be presented by the new Government. Being one of the core sectors of the economy, the real estate sector is still waiting to be granted an industry status. Section 80EE of the Income Tax Act provides a deduction of Rs 50,000 to the first time homebuyers 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 the property value to increase the savings on taxation.
Nakul Mathur, Managing Director, Avanta India
We hope that the Ministry of Finance will help the co-working space to flourish. The concept is at the nascent stage and require government intervention to become a rage. It is profitable not only for the stakeholders involved but for the small businessmen too. We hope that the Finance Minister will do something to help this segment of real estate.
Rajat Goel, Joint Managing Director, MRG World
There are many aspects which are still obstructing the real estate sector from maintaining its full speed. To fulfil the mission of Housing for All 2022, it is essential to overcome these obstructions. First of all, the government should ensure land availability for affordable housing. The second most crucial aspect is the approvals related to the projects. Many times it is difficult for the developers to deliver the projects within the stipulated time due to delay in approvals. Therefore, it should be mandatory to have a time-bound approval system in the sector.
As per the latest update, the Finance Minister has already concluded a meeting with the farmer’s representatives and it is time now to address the demands of the realty sector. In overall, the industry is eagerly waiting to get the status of a developed sector in the days to come.