CREDAI’s charter
One of the main points stressed by CREDAI-Karnataka in the pre-budget charter of demands presented to Chief Minister Siddaramaiah was regarding stamp duty being levied on joint development agreements. “Due to high stamp duty on this instrument without any cap on the maximum, which was there earlier, it is becoming more and more difficult to do joint development projects . We have requested the Chief Minister to bring back the cap so that more projects can be done with the available resources,” Suresh Hari of CREDAI explained.
Requests for proper checks and balances to be in place to protect customers from being cheated by unscrupulous elements on multiple registration was part of the CREDAI demands. “We have also requested that the sub-registrar’s office be modernised with better facilities for both customers and officials. Multiple taxations on real estate has to be looked into which is ultimately borne by the buyers,” said Mr. Hari.
Problem of approvals
One of the main reasons for delay in projects is the multiplicity of approvals required for real estate projects, resulting in inordinate delays and consequently higher holding costs for developers. A single window clearance for projects would go a long way in bringing down costs of development.
A few other aspects needed would be:
• Government should bring out white paper on lending more aggressively by banks.
• Construction Finance for residential projects should be brought under infrastructure lending and such projects should be lent at a lower rate of interest with a longer repayment period.
• Banking sector should come forward to land financing arrangements for encouraging the real estate sector right from the land acquisition stage.
• Additionally, on case to case basis banks should be allowed to restructure the loans for easy functioning and external currency borrowing must be allowed in the realty sector as well which is barred presently.
• Most importantly banks must encourage loans for developers for plotted development projects.
Prakash Hegde, Chief Financial Officer, Cornerstone Properties
Housing shortage
Developers were allowed IT exemptions on their profit made between 2007 and 2012 in the process of developing housing units up to 1,000 sq. ft & 1,500 sq. ft under Sec. 80IB (10) so as to mitigate the housing shortage. This has propelled large scale production of housing stock during that period, resulting in erasing the shortage to some extent. This exemption should be re-introduced and the benefit should be available for units starting from 250 sq. ft to 1,500 sq. ft so that the shortage of 23 million units in the affordable segment can be erased in the shortest time possible.
The IT exemption upto Rs. 1 lakh on interest paid on housing loans should be enhanced to Rs. 3 lakh and such exemptions should be available not only for interest but also for principle payments.
At present, there is no provision for funding of land meant for development from the banking channel. A provision should be made such that banks are encouraged to start lending for land purchase by developers.
Real estate transactions are at present taxed by three types of indirect levies i.e service tax, VAT & stamp duty. Since real estate is only a transaction under the Transfer of Properties Act, such transactions should be liable only for stamp duty. The Union Government not only has to exempt real estate transactions from service tax but also has to coax State Governments to exempt them from VAT also.
Balakrishna Hegde, MD, Chartered Housing
Affordable housing
“The real estate industry in India has high expectations from the first full Modi budget, especially because the previous budget focused on the common man. The coming budget is expected to lay the ground for affordable housing in India. It is likely to provide incentives for first time home buyers and the affordable home buyers such as tax rebates and decreased home loan rate. The realty industry will only improve once the buying power of buyers increases. An increase in tax savings under 80C from the current Rs. 1.5 lakh and home loan exemption rate from the current Rs. 2 lakh would increase the buying capacity of people and thereby help recover the realty industry.
Real Estate Investment Trusts (REITs) should be fast tracked as it will give the much needed push to the realty industry in India. The budget is also expected to have some inclusions to promote foreign funding for the infrastructure projects.”
Ganesh Vasudevan, CEO, IndiaProperty.com
Tourism & Hospitality
With the new government’s assurance to establish tourism as one of the major focus areas of growth, we are expecting a bouquet of announcements including:
· Rationalisation of service tax, luxury tax, VAT etc., and a uniform taxation policy across the country. Our present high taxes are driving tourist traffic to neighbouring destinations in Asia Pacific that offer more competitive rates.
· A more effective single window clearance mechanism across the country and a drastic reduction in the number of licenses required to open a hotel. Presently, one needs over 100 licenses from as many departments to start a hotel.
· Infrastructure status to be accorded to this sector at a reduced threshold of Rs.30 crore.
· A definite review of the archaic Shops & Commercial Establishments Act and Contract Labour laws to bring them in sync with the requirements of the sector
· Invest in ‘Total Quality Experience’ to the visitors – before arrival till after departure. These should include tourist amenities, safety and security of visitors, information, communication & technology.”
Vineet Verma, Executive Director, Brigade Hospitality Services
More incentives
As of now, the relief of principal payment of home loan is part of Section 80 CC which is not enough, even though it was raised to 1.5 lakh in the last budget. For a loan of Rs. 50 lakh, the yearly principal payment works out to be roughly Rs. 2 lakh. Given that the person also invests in other saving instruments such as LIC, the limit for the home loan borrowers should be increased to Rs. 2.5 lakh.
To re-invigorate the real estate cycle, people who need to sell their current house and want to move to a bigger house need to be incentivised. One way to do that is to announce a holiday on short-term capital gains tax for one year provided people sell their house and buy a new one within 1 year. This measure will ensure that need-based second time home buyers are moving to bigger houses, ensuring that there is ample supply at attractive price available for first time home buyers.
Nimesh Bhandari, Co- Founder & CEO, Realtycompass.com
