Real Estate Sector’s Expectation from Union Budget 2018
Jan 19, 2018 Real Estate News
Like every year, this year also real estate sector expects few things from this year union budget for the upliftment of the sector.
The present government has launched a lot of policies and reforms in regards to the Indian real estate sector be it demonetisation or a necessary step RERA. The government is not leaving any stone unturned to make the sector more organised and transparent. But still, the sector needs a lot of things which they expect from the union budget.
Single window clearance: Nobody knows that why this move is still pending. It is a long awaited step which is very much required in the industry. Single window clearance can lessen the overall cycle time of the projects. Projects do not have to get delayed due to delay in approvals and developers can also focus on timely project execution. And after implementation of RERA, it has all over become more important to make easy the entire clearance and approval process such that there are no delays due to procedural problems.
Tax validation on REITs: REIT is yet to be listed in India. The taxation norms need to be simplified for REITs. Right now it is a critical requirement which will benefit the real estate sector due to the better participation from a broader bandwidth of investors.
Industry status for the entire real estate sector: Again another long standing move. Being one of the most important GDP contributors and fourth largest employment generator in the country, industry status is much needed. If the sector gets the industry status then the developers can raise funds at much lower rates while decreasing the cost of their projects that in return will help in pushing the demand. This overall growth will help in generating employment across various sectors that are directly or indirectly related to the real estate sector.
Better income tax benefits for the first time home buyers: This is an important step necessary for the residential real estate sector. Presently, a first time home buyer under section 80EE of the Income Tax act can avail tax deduction of up to Rs 50,000 per financial year. Hence, the limit for tax deduction should be increased such that the first time home buyers are incentivised and others are encouraged to buy property. In this way, the sale in the sector will improve.
GST rates: Currently as per GST, 12 percent is levied on the under construction properties which is considerably higher than the previous tax. The government should try to make GST tax rate more neutral so that it helps in reviving the real estate market. There should be more transparency and clarity on the input tax credit to help the real estate sector further.
Incentivise green buildings: With deteriorating condition of the environment, the government should encourage green buildings by incentivising such developers. Green buildings have a comparatively higher cost of construction due to which developers usually keep themselves away from such projects. But keeping in mind the growing state of pollution, the government need to encourage developers by offering them incentives in terms of some kind of tax exemption or FSI.
The present government has launched a lot of policies and reforms in regards to the Indian real estate sector be it demonetisation or a necessary step RERA. The government is not leaving any stone unturned to make the sector more organised and transparent. But still, the sector needs a lot of things which they expect from the union budget.
Single window clearance: Nobody knows that why this move is still pending. It is a long awaited step which is very much required in the industry. Single window clearance can lessen the overall cycle time of the projects. Projects do not have to get delayed due to delay in approvals and developers can also focus on timely project execution. And after implementation of RERA, it has all over become more important to make easy the entire clearance and approval process such that there are no delays due to procedural problems.
Tax validation on REITs: REIT is yet to be listed in India. The taxation norms need to be simplified for REITs. Right now it is a critical requirement which will benefit the real estate sector due to the better participation from a broader bandwidth of investors.
Industry status for the entire real estate sector: Again another long standing move. Being one of the most important GDP contributors and fourth largest employment generator in the country, industry status is much needed. If the sector gets the industry status then the developers can raise funds at much lower rates while decreasing the cost of their projects that in return will help in pushing the demand. This overall growth will help in generating employment across various sectors that are directly or indirectly related to the real estate sector.
Better income tax benefits for the first time home buyers: This is an important step necessary for the residential real estate sector. Presently, a first time home buyer under section 80EE of the Income Tax act can avail tax deduction of up to Rs 50,000 per financial year. Hence, the limit for tax deduction should be increased such that the first time home buyers are incentivised and others are encouraged to buy property. In this way, the sale in the sector will improve.
GST rates: Currently as per GST, 12 percent is levied on the under construction properties which is considerably higher than the previous tax. The government should try to make GST tax rate more neutral so that it helps in reviving the real estate market. There should be more transparency and clarity on the input tax credit to help the real estate sector further.
Incentivise green buildings: With deteriorating condition of the environment, the government should encourage green buildings by incentivising such developers. Green buildings have a comparatively higher cost of construction due to which developers usually keep themselves away from such projects. But keeping in mind the growing state of pollution, the government need to encourage developers by offering them incentives in terms of some kind of tax exemption or FSI.
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