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Realty sector bats for better incentives
Seeks industry status to enable developers to raise funds at lower interest rates
Hyderabad: As the Narendra Modi government is gearing up to present Union Budget for 2020-21 next month, the real estate sector is seeking better incentives for boosting growth in the segment which makes significant contribution to the country's economy.
Industry status to the sector, more tax benefits and cut in GST on key inputs and more liquidity to NBFCs are among the key sops that the sector is seeking from the Budget.
"We have been representing to the central government to improve ease of doing business for real estate sector. However, that has not happened so far. We expect the government to announce requisite measures the in Budget to improve ease of doing business for the sector," Gummi Ram Reddy, Chairman, Credai Telangana, told The Hans India.
Reddy also suggested to the Centre to re-introduce input tax credit (ITC) which would benefit the sector as well as the consumers. "Tax benefits for home buyers should be extended to second and third homes. This will spur demand in the housing sector," said.
Seeking industry status to real estate, Shishir Baijal, Chairman & Managing Director, Knight Frank India, explains that real estate is one of the major contributors to the economy as it supports innumerable ancillary industries and provides employment to millions, directly and indirectly.
"Growth in real estate has a multiplier effect on the economy. Industry status will enable developers to raise funds at lower rates and cut down their cost of capital and augment their execution capabilities," he said.
On affordable housing, he felt that sales demand had not picked up in this space despite several measures initiated by the central government in the last few budgets. "Therefore, some urgent steps are required in the upcoming Union Budget.
To begin with, the government can enhance the eligibility criteria for Credit Linked Subsidy Scheme (CLSS) and GST rate benefits to help a larger section of consumers in urban centres," he said.
The annual household income criteria across all consumer categories should be enhanced so that it is in sync with house prices in major urban markets like Mumbai and Delhi.
The affordable housing price definition should also be enhanced for lower GST rate benefits to reach a larger segment of consumers, he added.
He also pointed out that availability of land is a major hurdle in the implementation of these projects. "For private players to enter this segment and to help achieve the ambitious 'Housing for All' targets by 2022, the central government needs to direct State governments to start earmarking land parcels for this purpose and make them available for free/nominal costs to developers in order to bring down the input costs," he observed.
Avneesh Sood, Director, Eros Group, while underlining the need for boosting growth in realty, urged the Centre to initiate measures in the Union Budget 2020 to speed up infrastructure and economic development. "The government must have a strong objective in 2020 to improve economic development.
Policies should be specifically focused on generating mass demand and employment because a slowing economy underscores the importance of real estate as an option to boost GDP growth rate," he maintained.
Also batting for industry status, he has sought cut in GST rate on raw materials such as cement and steel, which accounts for major chunk of construction cost.
"Further, premium on FSI and cost of land acquisition needs to be rationalised. We are also expecting a single-window clearance mechanism which has been a long-pending request from the sector as it will help in completion of projects faster," he reasoned.
Urging the central government to improve the liquidity of non-banking finance companies (NBFCs), he said: "India's economic policy should be more sensitive to regional and sectoral diversities which will help in streamlining the industry in the long-run.
We hope the government to take more developer and investor-friendly decision for the progress of the real estate market in the coming Budget".
Sood has also sought tax exemption on vacant properties and rationalization of taxes on REITs.