Realty seeks sops to boost growth
Even as Nirmala Sitharaman, the first full-time woman Finance Minister of India, is getting ready to present full Union Budget 2019 on July 5 after Narendra Modi-led NDA government retained power at the Centre with massive mandate in 2019 General Elections, real estate, the key sector that plays crucial role in India’s economic growth, is seeking incentives and new initiatives to boost growth in the sector.
Even as Nirmala Sitharaman, the first full-time woman Finance Minister of India, is getting ready to present full Union Budget 2019 on July 5 after Narendra Modi-led NDA government retained power at the Centre with massive mandate in 2019 General Elections, real estate, the key sector that plays crucial role in India's economic growth, is seeking incentives and new initiatives to boost growth in the sector.
Bank finance against lands, increase in tax exemption limits for home buyers, solution to NBFC crisis, faster clearance to realty projects and boost to infrastructure sector top the wish list of developers as they seek support from the government in upcoming Union Budget.
Gummi Ram Reddy, president, Credai Telangana, underlined the need for the concrete steps from the Central Government in the upcoming Budget to encourage banks to provide funding to real estate projects against the land if it was serious about achieving 'House for All' by 2022.
"Land prices are skyrocketing now. But banks are reluctant to extend loans for developers against the land.
NBFCs are offering such loans, but interest rates are comparatively high. At such a high finance cost, it is not feasible for developers to construct affordable housing units," Reddy reasoned.
Pointing out crisis in non-banking finance companies (NBFCs), he said efforts should be made to bring the key sector back on right track.
"NBFCs have extended finance to real estate sector in a big way. They are in trouble now. Centre should find some way out for the key sector. Otherwise, the crisis will impact housing sector," he pointed out.
Reddy also batted for increase in tax exemption limits on home loans availed by employees. "At the present, the tax exemption limit is Rs 1.5 lakh per annum. This should at least be increased to Rs 3 lakh to encourage the salaried to buy houses," he said
He also sought single window clearance framework from the Centre on the lines of RERA to speed up approval process. "Getting clearances for real estate projects is a cumbersome and time-consuming process now. Faster clearance process will help the sector in a big way," he said.
Reddy also sought reduction in GST on cement and other building materials. "Input tax credit (ITC) has been removed for real estate, but cement, a key input, still attracts 28 per cent GST. It has become a burden for end consumers," he said, seeking removal of tax on notional rent on unsold units.
Surendra Hiranandani, founder & Director, House of Hiranandani, sought industry status for the sector.
"To bring back growth in the sector, which is so vital to any developing economy, we expect the government to impart industry status to the sector which will enable developers to cut capital costs and pass on the benefits to consumers," he said.
The government should speed up its measures for infrastructure development which will ensure cheaper land for housing and push affordability, he added.
"We hope that the government brings positive measures for the holistic growth of the Indian real estate sector, which is imperative to fuel India's growth engine," Hiranandani added.
Sanjay Dutt, MD & CEO, Tata Realty & Infrastructure, said that easy availability of capital would drive growth of real estate sector.
"India needs a stable political and investment climate supported by growth-oriented Union Budget 2019. Realty sector needs strong demand fundamentals through economic activities, including continued infrastructure development, and easy availability of capital," he said.
Anuj Puri, Chairman, Anarock Property Consultants, maintained that ITC in GST should be re-instated.
"Without ITC benefits, builders are seeing sizeable drop in their profits and will eventually pass the buck on to buyers in the form of higher prices.
With the ITC benefit, property prices will remain under control and thereby boost sales, helping beleaguered developers to overcome some of their financial stress," he said.
He also said that Indian real estate should be made more attractive to foreign investors.
"The Budget is an ideal platform from which to announce further incentives that will attract more foreign investments into the sector", he maintained.