There are lots of road blocks in the real estate industry. First, demand has stagnated due to sky rocket prices against limited disposable income. The Reserve Bank of India Governor had refused to cut rates to help push demand, rather he shifted the onus to property dealers and constructors. The real estate bill proposed a lot of measures that will help booth the sector while also keeping a check on the flow of money and successful implementation of projects. The sector also hopes that a single window clearance and processes are fast tracked.
Five realty companies share their expectations for the upcoming Budget 2016:
We hope that some of our long-standing demands are met this year, says Ganesh Vasudevan, CEO, IndiaProperty.com.
1. Real Estate Bill: A framework for implementing the Real Estate Regulatory Bill that has been passed will help bring execution focus and give the much-needed transparency to the real estate industry. Specific budget allocation and time bound plans towards setup of state-level regulators will be a key announcement.
2. Goods & Services Bill: Roadmap for implementation of the GST will help streamline multiple taxation points and rates and help in better pricing of constructed homes.
3. REITs is expected to revive the realty sector in India, but one of the biggest hurdle it faces today is the Dividend Distribution Tax (DDT). The industry is expecting the Budget 2016 would do away with DDT and developers and other asset holders would soon announce the first REIT listing in India.
4. Single window clearance: The real estate industry needs single window clearance to fast track project construction and safeguard both retail and individual investors from losses due to delayed or stalled projects.
5. Tax sops for India based start-ups towards brand building and capitalisation expenses would help. Clarity on laws for eCommerce companies in India is also critical. Currently each state has different laws and definition for eCommerce industry in India, which is a hurdle for the growing industry.
6. Taxes: Capital gains tax for ESOPs and Angel exits should be made on par to public market investments, encouraging angel investments for start-ups and increasing the upside for employees of start-ups.
Nirmal lifestyle. Dharmesh Jain, Chairman & Managing Director, Nirmal Lifestyle & President Maharashtra Chamber of Housing Industry (MCHI)
Every year we keep assessing the gaps in terms of expectations of the industry, meeting the overall goal of the government and what we can execute on ground.
The government has the mission of creating “Housing for all” by 2022, which is probably the largest housing project/ plan seen by any country in the world.
There are fundamental changes required in the system which we will request the government to undertake. Firstly, for affordable housing, we need various incentives which include concessional loans and availability of easy foreign capital.
Secondly, it’s extremely important that various facets of real estate are looked at on par with infrastructure because essential job creation and momentum in the economy is going to come from real estate sector.
As a body and real estate developer, we want the government to focus on three main aspects — Infrastructure Status, Easier Credit and Speedy Approvals.”
Ajay Nahar, Architect & Developer, Partner Nahar Group & MD, Nahar Projects
1. Single window clearance: Firstly, Government should provide a single window clearance system, so that approvals are given in a pre-defined timelines, furthermore bringing transparency in the overall working system. The lengthy and complex approval process leads to a high gestation period, which eventually results in project cost escalation by 20-30%.
2. Tax benefits on home loans: Secondly, 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, that will reduce the tax burden on the home buyer and the developers may see an approximately 15% rise in sales as a result.
3. GST: Thirdly, the Finance Minister should announce a specific date for the implementation of GST. This major reform will give the industry a very clear taxation structure and induce a major sea change for the logistics architecture, since logistics will be driven by cost and not by a regulatory regime.
4. Industry status: Lastly, developers should get an industry status and should be able to avail finances at cheaper rates from financial institutions that will spur economic growth.
Sandeep Ahuja, CEO
Last year, many expectations of developers were fulfilled.
An increase in FDI, private equity, single window clearance, REITs were some of the demands for which plinth work was laid in last financial year. There are many more factors which need to be attributed if we want to develop a milieu which is conducive for the growth of real estate.
The Introduction of Special residential zones, regulation of construction material, removal of multiple taxes associated with home purchases, Real estate regulatory bill, Industry Status, clarity on GST and decreased dividend distribution tax(DDT) needs to be addressed in the upcoming budget. Clarity on REITS, Real Estate bill and GST are amongst those factors, on which real estate fraternity is desperately expecting clearance in the upcoming budget.
Dhaval Ajmera, Director
Despite the various schemes and policies announced by the government, developers remain unclear about the implementation of these policies.
In the upcoming budget, we expect the FM to liberalise the sector by incentivising/ relaxing the interest rates by bringing down the home loan interest rates which will optimise the homebuyer sentiments. Also, the government needs to provide incentives like Income tax, VAT service tax benefits.
The government also needs to effectively implement the 80 I A, keeping in mind the current rate and taxation this scheme will aid in getting the cost down which in turn will trickle down the benefit to the end consumer. This will help in rolling the cycle in a much bigger form. The system supports up to 200+ odd industries and hence, it is important to have these kinds of benefits.
In order to encourage the customer and to provide boost to the affordable housing segment, home loans should be at 6% for houses ranging from Rs 50 lakh to Rs 75 lakh. Lastly, the service tax & VAT in the past three years built into the developers’ cost needs to be looked in, as the developer has to charge service tax to the consumer which we feel isn’t fair. The charge of an immovable asset borne by the consumer needs to be eroded.”