After being through the various structural changes and demand pressures over the past two years, the real estate sector is expecting the upcoming Interim Union Budget for 2019-20 to rationalise the Goods & Services Tax rates for underconstruction properties, further incentives for affordable housingNSE 0.27 %, and convergence of stamp duties within the GST rates.
Given the sector’s linkages with other industriesNSE 2.90 %, contribution to the economy’s growth and support to job creation, most developers continue to reinforce a long pending demand of awarding industry status to the sector.
“Boosting farm incomes and adding job opportunities are the twin tests for Union Budget 2019-20. Real estate and construction industry fit into the Budget 2019-20 scheme as the second largest employer after agriculture, and contribute close to 10% of GDP. Alignment of GST and personal income tax so as to boost home ownership is a strategic option that government may well consider exercising,” said CREDAI national president Jaxay Shah.
Despite the regulatory approval being in place for quite some time, REITs, a potent instrument of change in the real estate industry, have been held back. To make real estate investment trusts (REITs) more attractive for investors, experts are suggesting making it more tax-efficient for investors.
“REITs have the potential to enhance the supply of commercial real estate — an enabler for the employment ecosystem. For unit holders, the long-term capital gains holding period for REIT units should be brought down from 3 years to 1year,” said Shishir Baijal, chairman, Knight Frank India.
Given the liquidity pressure created by fears of defaults by realty developers and non-banking financeNSE 0.10 % companies (NBFCs) following the IL&FS default in September 2018, experts are also seeking to re-finance NBFCs by raising their limits.
“For the industry at large, one of the most critical steps that this budget can take is to increase the finance limits for NBFCs. NBFCs constituted more than 50% developer finance in 2018 as against 30% in 2011. The government must revive the sector by pumping in more money into NBFCs which lend to developers,” said Anuj Puri, chairman, ANAROCK Property Consultants.
“A road map to execute the ‘infrastructure status’ accorded to the industry in the previous budget needs to be drawn. Further extension should be given for availing benefits falling under Sec. 8O-IBA for Affordable Housing Scheme under Housing For All. The government can also consider differential GST rate an for apartment value of more than Rs 7,000 per sq. ft,” said Ashish Puravankara, managing director, Puravankara.
Among other key expectations, most developers want an abolition of GST payable by the landowner in a Joint Development Agreement (JDA) and also removal of tax on the unsold housing inventory.
Source : Financial Express