For the common Indian Public who is staggering under the gruelling after effects of Demonetisation, the Union Budget 2017-18 is the only ray of hope. Same in the case of real estate sector which has witnessed a severe impact of demonetisation as property transactions have drastically declined with its announcement. Some cut in the tax rates for middle-income groups, more transparency in the sector as well as some deduction in stamp duty for home registration cost among many more is what everyone is expecting.
So here are the following are the list of expectations from the Finance Minister Arun Jaitley when he presents his Budget on February 1:
Increase in income tax slabs: The basic exemption limit of tax should be increased from Rs 2.5 lakh to Rs 3 lakh. The 20 percent tax slab should cover income from Rs 10 to Rs 20 lakh and not less than that and income over Rs 20 lakh should be taxed at 30 percent.These modifications will help in increasing the disposable income of buyers, enabling them to pay higher equated monthly installments (EMI), if need be.
Incentivising Home Loans: The tax exemption limit for the home loan should be increased from Rs 2 lakhs to around Rs 5 lakhs. This is because the property prices have increased 200 percent over the past few years. This step will encourage people to use the white money for purchasing homes.
Looking into the requirements of first-time home buyers: Although Government has made so tax deduction schemes for first time home buyers, but, this is applicable only if the home loan is sanctioned between April 1, 2016, and March 31, 2017. However, it is expected that in order to make Housing for All mission, a great success, the government would extend this period from March 31, 2017, to March 31, 2018.
It is expected that in the upcoming Budget, the value to avail tax deductions for the first time buyers will be increased to Rs 50 lakh which is currently Rs 35 lakh.
Increase in house rent allowance: Increase in the house rent allowance is expected. Service individuals or employees working in private and multi-national companies should be given 100 percent tax exemption as most of them travel to other cities and stay on rent. This will encourage them more to take properties on lease and avail the tax benefits and in return will also boost the renting sector while keeping the real estate prices in control.
Reduction in stamp duty: The stamp duty charges should be reduced from the current charge of 5 percent. This will give a much-needed help to even the highly suppressed sectors to recover and would also bring more transparency in the real estate sector.
Here is what industry leaders expect:
R K Arora, Chairman, Supertech Ltd said, “We expect Budget 2017 to streamline taxation structure of the country through successfully rolling out GST. By simplifying taxes, the new uniform tax regime will bring much needed clarity in how taxes are levied while eliminating instances of double taxation. Once passed on to the buyers, these benefits will result in lower cost of property. Also, we expect the budget to give further boost to the system of single window clearance so that projects are completed on time. Generally, projects get stuck for 1-2 years due to approvals. In my opinion, this year’s budget should also give industry status to the real estate sector which will help us in accessing funds at lower rates from financial institutions and benefits of which can be passed on to the end customers.”
Dhaval Ajmera, Director, Ajmera Realty expresses, “This year Budget can hold some really good news for homebuyers in the light of the changes expected with the demonetisation initiatives taken by PM Narender Modi where lots of liquidity and funding have come into the bank. To boost consumer demand in the sector, the industry hopes for more favourable taxation measures to be introduced by the government. These include increasing the tax deduction limit for housing loans to make it more in sync with the high cost of real estate in metropolitan India, There may also be a reduction in the tax rates, which currently stands at 10 percent for incomes above Rs2.5lakh, 20 percent for incomes above Rs 5 lakh, 30 percent for incomes above Rs 10 lakh.”
Ravindra Pai, MD, Century Real Estate shares, “We are hoping that in this budget, the term affordable housing is clearly defined and also accorded “Industry Status”. We would also like to see more spends as also concrete steps in the digitisation of land/property records which is in tune with the digital India vision of the PM. This will considerably reduce litigation, free up more lands in cities to make it more affordable and reduce project timelines which will directly translate to lower costs to the end consumer.”
Ravi Ramu, CEO and MD, VBHC says, “We are anticipating the Budget with a heightened sense of expectation. The Finance Minister has a considerable opportunity in this Budget to enable the Affordable Housing segment to provide for what is unquestionably a huge potential to be fulfilled in our Country. There is a considerable lot of things that the Budget can open-up for our Affordable Housing segment. Our belief stems from a catalyst which will ease impediments like the present approvals regime, the undue burden of both direct and indirect taxes, the high finance costs for our customers and ourselves, etc. We are therefore optimistic as the morning of 1 February 2017 and the Budget approaches.”
Sukhraj B. Nahar, Chairman and Managing Director, Nahar Group comments, “The count down to the most awaited Budget for the year has begun and the sector definitely has high expectations for both the common man and the industry. Key factors that need to be looked at are the income tax rate, provide clarity on GST, raise House Rent Allowance (HRA) deduction and announce policies to standardize construction materials in order to uplift the real estate industry. Hike in the HRA deduction limit for salaried people. Any sector can work on a standalone manner hence those factors that impact the sector directly or indirectly would also have to be looked into. Housing loans for the common man, complete clarity for a ‘less cash’ nation could be a few from the many more.”
Girish Shah, Director, The Wadhwa Group shares, “Given that the IMF has recently cut India’s growth estimate for 2016-17 to 6.6% from its earlier projection of 7.6% due to the impact of the government’s move to scrap some high-value currency notes, the real estate industry at large will keep a close watch for the Union Budget presentation with guarded caution. While demonetization has had its effects, we are optimistic about amendments and addressal of certain key areas such as: Implementation of GST with a more unified taxation, Clarity on the land acquisition policy, REITs to get activated soon, Implementation of policies that bring in transparency into the sector like RERA and Benami Transactions Bill, make housing affordable by reducing the cost of finance for both developers and buyers.”
Hence, all that the industry- walas are hoping for is some confidence-boosting measures in the upcoming Budget which will put more money in people’s hands, and that itself will bring back home sales to pre-demonetisation levels.