Real Estate Industry Eyes Budget 2019: Will It Deliver?
Financial plan 2019 is practically around the bend where the NDA government is good to go to introduce a full spending plan for the year 2019, which will turn out to be extremely crucial for the supportability of the present government. The current year’s financial plan isn’t only decisive of Narendra Modi government’s certainty of being re-elected after the Lok Sabha race yet additionally set up point of reference. His administration has experienced different highs and lows, basic changes and request weights in the course of recent years. The land business has likewise been careful harsh climate, uneven waters where cruising has been intense.
The IL&FS emergency hitting the Indian real estate industry, inflow of assets degree as the cash stream nearly evaporated for the two designers and the home purchasers, the list of things to get of the Indian realty has developed longer. All references are currently being pegged against the primary spending plan of the Modi government that was hailed as the start of ‘achche noise’. It gave a bonanza to citizens by expanding the essential exception limit just as upgrading as far as possible under Section 80C. While a few spending plans offered a couple of derivations to the citizens, others have removed a portion of the tax cuts or even exacted extra assessments.With the upcoming Union Budget 2019-20, the real estate sector is much anticipated and already looking forward to the optimistic changes in the market to restore its setbacks. As it is the last full budget before the general elections 2019, the reduction of the severe liquidity crisis is on the wish list of the realty players. The builder and buyers have different expectations from the Union Budget, where the builders are expectant of the incorporation of stamp duty within the orbit of GST, the buyers are on tenterhooks of the government to deal with incomplete projects.From smooth credit line to industry status, here are the rundown of wishes that the business insiders including the land players have advanced before the Narendra Modi government.
Ashish Sarin, Director and CEO, AlphaCorp– The real estate sector is expected to witness a boost in budget 2019. Keeping the trend of promoting affordable housing alive this year, the major demand in budget is extension of income tax exemption applicable to current affordable housing units. Another prominent expectation from the government will be single window clearance system. Reduction of GST on under construction projects upto 5% from 12% will be a significant demand in the upcoming budget.
Manas Mehrotra, Chairman, Incubex NestaVera- The Indian co-working industry has seen a phenomenal growth in the last few years. However, there are some key changes that co-working firms are expecting around GST and taxation in Budget 2019. Input tax credit under GST is an important issue that concerns the sector. The companies are expecting that the government would enable co-working firms to claim input credits on work contract and construction services supplied, as detailed under GST provisions. This would check the increased outflow of cash that co-working firms are currently experiencing. The firms are hoping that input tax credit under GST be extended to developers so that it is passed on to companies who lease out space and thereby reduce their overall costs which would significantly aid faster growth.
Dhruthi Reddy Kasu, Director, Kasu Assets Development Pvt. Ltd- India is the fastest growing wealth market in the world with HNWI population growth at 20% so did their wealth in 2018 (Karvy India wealth report 2018). However, there is clear evidence that this category of Indians prefers to wait and watch before investing in physical assets. There is a perceived anticipation for long-term benefits of RERA, GST and Demonetisation; RERA brings in transparency and accountability on the part of all developers, in turn raising credibility of the industry at large. GST at this point is liable without any Input Tax Credit availability to end buyer- given that some relief is given in this regard- certainly it is much needed and welcome policy on behalf of the government to support the industry. of co-working business in the country.
Dinesh Jain, MD- Exotica Housing- Dwelling is one of the fundamental rights of living so housing sector should be brought under ‘No Tax’ bracket in order to ensure lowest cost of developed properties and achieve housing for all in India. This step will provide indirect benefit to home buyers and make housing sector more affordable for all categories. After success of CLSS, Govt.must raise subsidy criteria for first time home buyers in PMAY as another encouragement. Interest subsidy will attract more end users to invest in property. Post RERA, housing sector has witnessed transparency in the housing sector hence Govt must award industry status to the real estate sector. Industry tag will help real estate sector to get truly organized and raise standards. Single window clearance is still a prime demand of real estate.
Dr. Niranjan Hiranandani Founder & MD , Hiranandani Group – Rationalization of taxes would be the one most important factor that the real estate industry would expect at this point in time from the upcoming budget. It is not just about reducing taxation rates; rationalization of taxes is necessary as it will create an environment conducive along with the positive sentiment to enable generate new business opportunities across the economy. Among the expected points, I would also add the expectation of bringing stamp duty within the purview of GST; Input Credit of Construction against the output of Renting; incentivise rental housing to meet Housing for All commitment by 2022 and increasing limit of interest deduction, paid on home loan, from 2 lakh to 3 lakh. The real estate industry looks forward to a positive Budget from the Hon’ble Finance Minister.
Farshid Cooper, Managing Director, Spenta Corporation-In the 2019 Budget, the real estate industry will be looking to the Finance Minister to announce progressive tax SOPs for the industry as well as home buyers. Among other things, there are two important aspects that we hope are addressed in the 2019 Budget. Firstly, the cap on deductions available to home buyers on interest paid for residential property should be increased from Rs. 2 lakh to Rs. 4 lakh thereby encouraging home buyers to invest in real estate. Secondly, to address the issue of affordability, Stamp duty should be included in the purview of GST. This has been a longstanding issue for homebuyers and developers alike and we hope that it is addressed as soon as possible.
Harinder Singh, Chairman, Realistic Realtors– The miraculous mercy from government to revive the real estate sector, which provides a huge number of employment in the country and also has a promise to deliver housing for all and especially housing in the affordable segment, is only possible if Budget 2019 addresses not one but many suggestions and demands from the industry. Correction / reduction in GST from 12 per cent to 6 per cent is the most reasonable demand. Stamp duty to be covered under the preview of GST. Increase in the limit of interest deduction from 2 to 3 lakhs or more. Awarding infrastructure status to real estate is biggest of all demands and could be a game-changer as this will help in availing funds at lower rates and benefit each stakeholder of the sector. Input tax credit adjustment on cost of construction against the rental income output. The industry is eagerly looking forward to receive much-awaited attention and motivation to survive and grow to the next level.
Khushru Jijina, Managing Director, Piramal Capital & Housing Finance– The Government needs to take aggressive measures, albeit temporary, to mitigate stress in FY20. To stimulate housing demand in FY20, the budget should aim at policies to reintroduce income tax deduction on principal and interest on a second home loan. In addition, Income tax deduction limit on interest paid should be hiked to Rs 5 lakhs especially in Tier 1 cities. Similarly, IT deduction allowed on principal paid should be increased. The policies should also be aimed at increasing ease of doing business for developers by rationalizing tax structure with a uniform GST preferably lower than 12% and merging stamp duty into GST and stimulus package for major developers should be rolled out and delivered through major NBFCs.
Samyak Jain, Director, Siddha Group- The government is set to announce the Union Budget 2019-20 and with it, realtors are looking forward to measures which will impact the sector positively. The realty market has been one of the largest contributors to GDP over the past years and progressive actions will help to boost it further. Developers are hoping for the grant of an industry status which will boost activity and catalyze institutional funding. Single window clearance also needs to be taken into consideration for faster implementation and execution of projects. Additionally, the GST rates and interest rates on home loans also need to be addressed to make housing affordable for everyone. Overall, we will wait and watch to see how the union budget impacts the realty sector.
RK Arora , Chairman, Supertech– The government has been focusing much on the sector over the past few years to ensure that the target of housing for all by 2022, India’s 75th anniversary as an independent country. However, much needs to be done. While GST reduced the multiple taxes and complexities in real estate transactions, the stamp duty remains. This must be removed as is the case for most other industries. Another request we have is that the real estate sector be given industry status. The growth of the real estate sector is one that has a ripple effect on many other ancillary industries. The sector was one of the worst hit after demonetisation and has only just started to recover. The change in status make it easier for developers to raise funds at lower rates. The cost of capital is a major problem at this time and a reduced cost of capital would impact overall project costs and costs to buyers. We also hope that the government reduce the GST rate applicable to housing as that would be the ideal boost that is much needed by the industry.
Ravindra Pai, Managing Director, Century Real Estate- I am hopeful of more spends towards digitization of land and/or property records which is in tune with the Digital India vision of the PM. This will considerably reduce litigation, free up more lands in cities to make it more affordable and reduce project timelines which will directly translate to lower costs for the end consumer. GST in real estate also requires further streamlining as additional levies like stamp duty and registration are still separately charged and should be included within a single tax structure. Also, lowering the GST slab on under-construction properties to 5 percent from the existing 12 percent would be a welcome move.Another valuable provision in the Budget would be the scope for financial institutions to fund land purchase as it will help reduce the costs and make the properties more affordable.
Sarjan P Shah, Managing Director, Group Satellite– The real estate sector, between demonetization and GST (on only under construction apartments) has faced a severe cash crunch because buyers have moved towards wanting to purchase only post-completion ready to move in flats. As such, government should consider short term measures to ease liquidity and allow banks and NBFCs to help developers tide over their liquidity requirements to ensure asset completion. It is important to note that not all situations require the heavy hand of the law, which often causes more value destruction than creation, but only suitable restructuring from all stakeholders so as to ensure that business continue to occur smoothly. In the long term, the entire model will need to become more equity-heavy and debt-light in order to sustainably complete projects before sales occur.
Shivam Sinha, Founder and CEO, Indiassetz- We are hoping that this interim budget will bring some relief to both the developers as well as buyers. Rationalisation of the taxes on real estate and streamlining of taxation norms will make it more attractive and incentivised for people to invest in this sector. We expect the budget to focus on facilitating smart city growth and infrastructure. Real estate holds immense potential and investment opportunities as it addresses the future challenges of the society and also goes a long way in boosting the socio – economic confidence and willingness to invest in the minds of the people. We look forward to structural incentives, funding announcements in the upcoming budget and a convincing game plan to ensure that the allocated funds are utilized as specified, within a specified deadline. We expect the government to provide interest rate subvention for first home buyers and generate separate income tax exemption limit for EMIs on housing to make housing affordable for the middle class. We also expect the government to increase the home loan caps eligible for subsidy and abolish angel tax for Government recognized start-ups.
Ssumit Berry, Managing Director, BDI Group– 2019 will be the year of growth and development for Indian real estate. We expect the budget 2019 will be in favor of the sector. Additional income tax deduction will encourage more homebuyers to invest in the affordable housing segment. Bringing stamp duty within the purview of GST and other tax benefits to the affordable centric realty market will turn government’s affordable housing dream into reality.”
Dhruv Agarwala, Group CEO, Housing.Com/Makaan.Com/Proptiger.Com- We do not expect any major new policy announcements for the real estate sector in the interim budget that would have a favourable impact on the sector. However, if the government considers increasing the tax deduction limit for housing loans, it would be a welcome development. Also, an increase in the tax exemption limit on personal income tax would go a long way in putting more disposable income in the hands of consumers, which would have a positive impact on the economy, which in turn would be good for the real estate sector going forward.
Manoj Gaur, Vice President CREDAI-National & MD, Gaurs Group– GST’s inclusion in the country has allowed the developers to pass on the benefits of the input tax credit to the buyers. Bringing stamp duty and registration charges in the ambit of GST will be highly appreciated if the Budget addresses it. We expect this year’s interim budget to increase the income tax exemption limit under Section 80 (C) of the Income Tax Act, 1961 from the current Rs 2.50 lakh to at Rs 5 lakh, which will encourage people to go in for their own residential premises.
Pradeep Aggarwal, Co-Founder & Chairman, Signature Global And Chairman, National Council On Affordable Housing, Assocham– In the union budget 2019, we are expecting at least the double amount of fund which was allocated in the previous budget under the Prime Minister’s Housing Scheme. So that ordinary people can get the benefit of subsidy in home loan and more people can fulfil their dreams of owning a home. Apart from this, if the government reduces the GST slab in this budget, then it will have to pay attention to the input tax credit as well, otherwise it will be a direct hit on affordable housing as the house becomes even more expensive and will be away from the common man’s reach.
Deepak Kapoor, Director, Gulshan Homz – Rationalization of taxes would be the one most important factor that the real estate sector would expect from the upcoming interim budget. There should be an increase in the volume of rebate or comfort, which one receives while taking individual housing loan. With union budget, realtors are looking forward to bring the abolishment of TDS into the consideration which is deducted for the transfer of movable properties and is a very tedious process. If immediate abolishment of TDS does not seem possible then the government should either get an alternate way or increase the limit up to Rs 1 CR. We welcome all the measurement by the government in order to increase the flow of money into the sector because real estate provides employment to a large section of the population. If liquidity comes into the real estate sector then it would be an improvement for entire economy of the country.
Nakul Mathur, MD, Avanta India
To overcome the impact of reforms like GST, RERA & demonetization, this time expectations are high from the government. We are hopeful that the interim budget would encourage, strengthen & improve the real estate sector and will also pick up pace in GDP growth. Also Real Estate Investment Trust is yet to be listed and tax reforms for REITs must be thought about as well, considering its long term benefit for the sector and country.
Gaurav Gupta, General Secretary CREDAI-Ghaziabad & Director, SG Estates– Real estate sector has modernised today with the concepts of green building taking over. Interim budget 2019-20 must address about providing special incentives to the developers and projects, which are offering eco-friendly concepts. This will greatly promote green building concept amongst the developers and help environment as well. Also, Single Window System in real estate sector should be executed across the nation so that timely execution and delivery of projects take place. This budget must also aim at increase the present savings limit so that the young population of the country gets a higher spending power and look at real estate sector as an investment avenue.
Kushagr Ansal, President CREDAI Haryana & Director, Ansal Housing- This interim union budget the government must ensure necessities for the upbringing of tier 2 and 3 cities along with decisions for infrastructural development and strategic connectivity between them. With the saturation of metro cities due to the lack of land availability and high prices, tier 2 and 3 cities must be next in line for urbanisation. Apart from this, any relief towards the personal income tax or increase in savings cap will bring about a cheer and improve the market sentiments that can be fruitful for the realty sector in near future.
Prateek Mittal, Executive Director, Sushma Group– In the union budget 2019, we expect the government to raise the allocated fund under the Prime Minister’s Housing Scheme to at least double the amount set under last year’s budget. Apart from this, the government should increase the income tax exemption limit under Section 80 (C) of the Income Tax Act, 1961 from the current Rs 2.50 lakh to at Rs 5 lakh, which will encourage people to go in for their own residential premises. Hence, the relaxation in the income tax slab will enhance the purchasing power of home buyers who are keen on having their own house and working hard for it. Also, even after being a key contributor to India’s GDP and the fourth largest employment generator in India, real estate sector has not been granted the Industry status. Providing an Industry status will enable the developers to raise funds at lower rates which in turn, will result in the reduction of project costs.
Dhiraj Jain, Director, Mahagun Group- The Union Budget 2019-20 holds immense significance as it will be the last budget to be presented before general election. Being one of the core sectors of the economy, real estate sector is still awaiting to be granted an industry status. Section 80EE provides a deduction of Rs. 50,000 for the first time home buyers 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 property value so that savings on taxation gets increased and real estate sector becomes an important investment option for buyers.
Ashok Gupta, CMD, Ajnara India Ltd– Looking at the upcoming election in mid of this calendar year, the feelers doing the rounds indicate that the interim budget is going to be more beneficial for the poor & middle segment citizens in the country. The government will hopefully look into getting industry status to whole real estate sector. It has been a long pending wish of the developers that will help in gaining access to finance at a much lowered cost, thereby making the sector more affordable.
Vikas Bhasin, CMD, Saya Homes- We urge the government to do away with regulation [Section 23 (5) of IT Act] on taxability of unsold property, which is held as stock-in-trade and not let out as the provision put avoidable pressure on developers/promoters who are facing a sluggish market. We are also expecting the CLSS budgetary support for both Economically Weaker Section (EWS)/Lower Income Group (LIG) as well as Middle Income Group (MIG) should be doubled so that more home aspirants can purchase their dwelling units.
Harvinder Singh Sikka, MD, Sikka Group– We would expect the government to bring into incorporation the stamp duty in the sector within the range of GST. The various subsidies provided under the government policies have been of great assistance in healing the realty market, but still some factors including the single window clearance and the status of Industry to the Real Estate sector needs heed to make a significant and positive change for the market.
Kamal Taneja, MD, TDI Infracorp- There are many positive policy making and initiative taken by the Government towards cleaning up and regulating the sector, but still several policy related issues needs the attention which can make a decisive difference. Long-time pending single-window clearance which can significantly reduce the overall projects cycle time needs to be addressed.
Ashok Naidu, Director, Kumari Builders and Developers – The real estate industry has been one of the major contributors to the economy and it creates a lot of job opportunity as well. The industry did not get its earned industry status so far and it’s long due from the Government. In the previous budget, affordable housing being given infrastructure status and hence the benefits have been clearly visible. In the upcoming budget, we’re expecting to extend the benefits to all segments of real estate. The Introduction of GST brought lots of tax regulations in the industry but some of the concerns still prevail in the sector. Currently, GST only covers under construction properties and it would be a great support to real estate if tax benefits are available for all properties. Also, stamp duty should be subsumed into GST to minimise the tax burden on buyers.
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