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Budget ho!- AsThe Budget Day Draws Near Realty Player And Consumer Are Ready With Their Wish-ListsBy ugesh sarkar, Section Noida Real Estate Property
As the Budget Day draws near both the real estate developer and the consumer get set to review their must-have lists
 It's that time of the year when people start to keep their ears open, eager to know what the Finance Minister has up his sleeve. Players in the real estate market, too, are ready with their wish-lists, but experts believe it would not be right to expect much from the government this year, thanks to the kind of fiscal deficit the government is facing. However, what the real estate developers are hoping for is that the budget provide sufficient stimulus and sops to help the sector achieve the desired growth rate. Even consumers interested in buying property or investing in real estate expect the FM to spell out some consumer-centric policies. For Vikas Vasal, executive director, KPMG, "The government is having a tough time managing its fiscal deficit. "To contain it the government has two options: increase revenue in terms of tax collection; and control/reduce its expenditure. Therefore, it is unlikely that the government will come out with any tax benefit for the realty sector per se." Hopes, however, are high. Says Navin M Raheja, CMD, Raheja Developers Limited, "We expect that the deduction of interest on home loan, under Section 24 of the Income Tax Act should be revised from the existing limit of Rs 1.5 lakh to Rs 3 lakh."
Redefining real estate Says Anil Sharma, CMD, Amrapali Group, "This (the infrastructure tag) seems to have got de-linked from real estate since the time land and property prices began to spiral. Source: Hindustan Times By Syed Amir Ali Hashmi Budget ho!: As the Budget Day draws near both realty developer and consumer get set to review their must-have lists Click on "Full Story" For More...
"A change in the definition of the real estate sector resulted in these activities being categorised as `outside' of the (infrastructure) sector. The immediate result of this was that banks could not extend loans for real estate activities on the same terms as they would to infrastructure companies, even though building new townships is akin to building infrastructure facilities. In the current sluggish market, it may be desirable to reinstate the definition of real estate business as contained in the Foreign Exchange Management Act (as per which real estate is considered as infrastructure)," Sharma adds.
Affordable housing Integrated affordable housing project development is almost akin to development of SEZs with complete set of infrastructure facilities," says Sanjeev Srivastava, MD Assotech Ltd. Accordingly, "affordable housing developers need to be given incentives for creating such an infrastructure in the country. Hence, integrated affordable housing project development should be accorded infrastructure status for the purposes of RBI, SEBI, IRDA and CBDT," points out Srivastava. Income tax deduction under Section 80-IB was available to developers for affordable housing. This facility was discontinued from April 1, 2008. This concession was highly successful in giving a boost to affordable housing but since state laws were not permitting higher densities, the benefit of it could not be realised to the fullest possible extent. Now almost all state governments have relaxed their density norms, (therefore) revival of concessions under Section 80IB would give boost to affordable housing," adds Srivastava. Gaurav Gupta, director, SG Estates, agrees. "The government should come up with measures that will help the developers dole out affordable houses to the end-user," he says. Gupta goes on to question the imposition of service tax on construction of residential complexes having more than 12 houses. "Taxing the construction of such residential complex will now entail a higher cost of construction. The discriminatory tax treatment is not understandable. Also, what is the sanctity of the threshold of 12 dwelling units in a residential complex," he asks. According to experts, developers should look at long-term benefits instead of short-term concessions. "What the government can look at is to increase the demand and continue interest reduction in housing (loan) or enhance the deduction limit. The government can also provide special tax incentives for budget housing. Instead of expecting small time concessions the sector should look at something that will help in the long run and which will boost the demand," says Vasal. Stamp duty reduction Many feel that stamp duty should be lowered. " Stamp duty needs to be brought down further to 4-5 per cent and made uniformly applicable across all states. Also, if stamp duty has already been paid on one transaction, there should be a mechanism to provide concession or a system of credit for any subsequent transactions. This would avoid the resultant cascading effect of Stamp Duty, thereby reducing the cost of a property. The concept of credit for taxes paid on subsequent transactions already exists in other statutes such as CENVAT (Central value-added tax), VAT, MAT, etc," says Raheja. Consumer activists are also demanding reduction in stamp duty. "Reduction of the stamp duty to 2 per cent will result in a win-win situation for both the government and consumers as there will be more transactions and the government revenue will increase. Since the value of transactions has gone up manifold in the past few years, the revenue will not get impacted due to reduction in the rate," says Nitin Saxena, president, All India Consumer Education Society. Consumer angle Consumers are eagerly looking forward towards a reduced EMI on housing loan in the forthcoming budget. "Agreed that the Finance Ministry does not have much of a say in the independent functioning of the banks. But the coming budget can bring in a notification that differentiates between the first-timers and those who are going in for a housing loan for the second time as far as the loan installments go. Let's say, it can be 7 per cent (interest paid on loan) for the former and 7.5 per cent for the later," says Saxena. Consumer activists also feel that the government should do away with the service tax on residential properties. "The logic is that ever since the government has imposed service tax, many builders have started charging clients, wherein the rule was very clear, that if the builder hires an outside contractor to build the units he would pay the service tax," says Saxena. He also feels that an effective regulator to control builders should be put in place.
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