From ET Realty
NEW DELHI: Industry status for the real estate sector, single window clearances and hike in tax deduction limit for housing loans are some of the expectations builders have from the upcoming union budget.
Builders and property market experts say growth prospects in the sector look better than last year and the government should support the sector with tax breaks and additional incentives to spur sales.
Niranjan Hiranandani, managing director, Hiranandani Communities feels the Union Budget 2016-17 will be more positive for real estate buyers rather than for the sector. “Perhaps the biggest challenge that the Narendra Modi Government faces is that expectations were very high; so whatever they do seems to fall short. So, my expectations are positive, and I hope the Union Budget makes the positives happen,” he said.
Builders‘ body NAREDCO has asked for complete tax exemption of interest amount to the home buyers or to hike the the slab to Rs 3 lakh. “Also rental income should also be considered for 100% exemption and if not 100% at leas 50% should be exempted,” said Praveen Jain, President, NAREDCO.
Anuj Puri, chairman & country head, JLL India called for offering financial protection from project delays to home buyers. “Instead of allowing home buyers tax benefits post-possession, the Union Budget should make a provision that allows these from the time they start paying interest on housing loans,” he said.
Puri also urged the need to provide more tax saving on housing loan and house insurance premiums. “The government should increase the tax deduction limit for housing loans, especially for buyers in metropolitan cities. The current limit of Rs 2 lakh is insignificant given the ticket sizes in cities like Mumbai.”
High home loan rates have been a big deterrent in slow home sales for the past two years. RBI has reduced the repo rate by a total of 125 basis points since 2015, but the complete benefits of the cut has not been passed on to the consumers.
Experts say keeping interest rates below the 9% and repo rates stabilized for housing sector will help buyers to show their interest to invest in realty sector that will help to boost our GDP to double figures and fulfill the mission “Housing for All 2022”.
Optimal FSI / FAR / density norms will help in reducing costs per unit and increase the economic viability of Affordable Housing, according to Harshil Mehta, chief executive officer, DHFL. He also urged the government to increase the limit of the priority sector lending (PSL) to Rs 35 lakh from Rs 25 lakh at present. “The annual increase automatically pegged to the WPI will empower customers and incentivise HFCs to lend to affordable housing projects thereby giving boost to the real estate sector,” Mehta added.
Removal of dividend distribution tax in real estate investment trusts (REITs) is another major demand from the realtors. Despite the announcement last year, there has not been a single REIT listing in India till date.
Also, the government needs to bring in control and stabilize raw material prices as they have a direct impact on final price of the product, feels Chintan Sheth – Director, Sheth Corp.