The highs and lows of the real estate sector are considered a direct indicator of the state of the economy. A rise in property prices with more Indians opening their kitty and spending it on realty could give the necessary fillip to manufacturing and lead to increased consumption, pulling the economy out of its downward spiral. Conversely, its continued slump makes the measures the government has in the budget for this sector all the more crucial. For a regular Indian planning to buy his/her dream home, wishes are galloping horses as far as budget hopes are concerned.
“(An) increase in relief in income tax for a person paying home loan instalments will encourage (more) people to opt for home loans and inadvertently push real estate sales,” argues Jay Patel, real estate industry veteran and founder of the property listing venture IndiaMLS. Industry body FICCI in its pre-budget memorandum submitted to the finance minister has also recommended the exemption limit under Section 24 for interest on loan for property to be increased at least to Rs 3 lakh per annum. It has also asked for circle rates variation to be kept at least 10 per cent for all, or 10 per cent or higher in case of metro cities.
From realty companies' viewpoint, the oft-asked-for industry status is long overdue. “Indian real estate sector is the most highly taxed with the combination of high direct and indirect taxes, stamp duties and levies for development,” points out Surendra Hiranandani, founder & director, House of Hiranandani. “These extraordinarily high taxes coupled with high interest rates have been crippling growth.” He feels industry status and single window clearances would “enable developers to cut capital costs and pass on the benefits to consumers.”
Adds Anshuman Magazine, chairman & CEO (India, South Asia, Middle East & Africa) of real estate consultant CBRE, “In addition to industry status, government should also ease borrowing norms to ensure steady in-flow of money from foreign investors.”
But first off in everyone's wish list is tax simplification—abolition of stamp duty, doing away with the one per cent local body taxes (charged by many states over and above the GST), and a single and reduced GST slab (though GST is usually independant of the annual budget).
“(The interim) budget in February did encourage investors and buyers, (so) the upcoming budget should contemplate the introduction of housing bonds for (real estate) developers, provide low-interest rate construction funds and (give) special status to housing finance companies,” notes Eros group director Avnesh Sood.
