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Vinod Behl
Hoping that the government would offer poll sops, home buyers have pinned extra expectations on the budget. Here’s what’s on their wish list:
Tax breaks
Home buyers’ biggest expectation from the 2019-20 budget is that the Finance Minister will take steps to increase their capacity to buy a home. One major way to achieve this is through tax incentives. Home buyers expect that the budget is likely to come up with a proposal to considerably hike the present income tax limit of Rs 2.5 lakh to at least Rs 4 lakh. The move may well bring more surplus money in the hands of home buyers, in turn increasing their purchasing power.
In fact, home buyers are hoping for a double delight i.e besides income tax relief, they are expecting that under Section 24(b) of the Income Tax Act, the home loan interest deduction limit will be increased from Rs 2 lakh to Rs 3 lakh. As Anuj Puri, Chairman, Anarock Property Consultants, says, “In a poll year, the government should and, quite possibly, may offer tax benefits to home buyers”.
Softening of home loan rates
Now that inflation is under control and oil prices may more or less remain weak, softening of home loan rates is also being expected. Prospective buyers would also like to see the budget offering some subsidy on home loans for affordable housing.
Cheaper building material
A significant drop in tax rates on building materials that would rationalise the prices of cement, steel and other materials is also being expected. This will cut down construction cost to benefit home buyers.
Tax rationalisation
High transaction cost of residential real estate has been a constant concern for home buyers. A home buyer needs to pay 6-7 per cent on property cost as stamp duty, besides paying 12 per cent as GST on under-construction homes (8 per cent for affordable homes). So home buyers are looking at lowering of this high transaction cost through GST reduction.
NAREDCO, in its budget memorandum, has demanded GST @6 per cent, which after input tax credit, will become tax neutral for end-consumers.
CLSS Spruce up
Those looking for MIG houses are not able to take benefit of increased area norms by way of credit linked subsidy scheme ( extended by the government till March 2020) due to unaffordable property prices. They want the FM to make interest subsidy more attractive in the budget.
Tighten leash on timelines
Home affordability can also be increased by controlling timelines and project completions. Home buyers want a three-pronged strategy on this front. Firstly, in line with government’s objective of ensuring ease-of-doing business, budget should create a mechanism to speed up project approvals and clearances.
Secondly, they want budget to announce incentivised policy to boost skilling of construction workforce and encouraging high technology to achieve scale of economy.
Then there is the all-important issue of stalled housing projects. The distressed home buyers whose hard-earned money is stuck inthese projects, are looking for relief by way of early completion of stalled projects.
RERA has done little to bail them out of this serious problem so far. And since the problem is largely due to developers facing fund shortage, home buyers are looking up to this year’s budget to unveiling some important policy measures like creation of sressed-asset fund to construct the incomplete housing projects. NAREDCO, too, wants the government to create such a mechanism with lending institutions to tide over the problem.
New impetus to affordable housing
Home buyers are looking for favourable measures that would enable them to avail of the benefits of infrastructure status granted to affordable housing. Echoing the sentiment of home buyers in this regard, Pradeep Aggarwal,
Chairman, Assocham’s National Council of Affordable Housing, calls for an effective implementation of infra status to affordable housing, with banks allocating a certain
fixed portion of funds for construction finance at reasonable rates. This will help bring down the cost of construction, making homes more affordable.
Industry voices
“We are hopeful that the FM will announce a steady structure for approval processes. The first step in this regard could be to have a master approval process for zoning levels or environmental clearances. Additionally, the stabilisation of stamp duty norms across states will help in reducing the misinterpretation through a simpler tax regime. We would also urge the government to create a new fund that will help buy out stressed inventory in at least the six major cities or offer a tax concession for Asset Reconstruction Companies.” — Sanjay Dutt, MD & CEO, Tata Realty Limited
“The sector, which has been hit by large unsold inventory and stalled incomplete projects, had been significantly dependent on raising funds from NBFCs to keep its operations going. However, post the IL&FS crisis, this line of financing has dried up. While RBI has shown commitment towards addressing capital requirements of the NBFCs in other segments, it remains to be seen if it will extend a helping hand to the realty sector by enhancing the financing limit of NBFCs to developers or by providing re-finance window for non-consumer loans by NBFCs”. — Gaurav Gupta, Co-founder and CEO, MyLoanCare.in
“We expect rationalisation of GST in the sector, better tax benefits and further streamlining of reforms. Both, homebuyers and developers, are expecting the Budget 2019 to give the necessary fillip to the sector". — Rajiv Gupta, CEO, Wave Group
“As realtors we are looking forward to rationalisation of taxes and the abolishment of TDS, which is deducted for the transfer of movable properties and is a tedious process. However, if immediate abolishment of TDS does not seem possible, the government should either provide an alternate way or increase the limit up to Rs 1 crore”. — Deepak Kapoor, Director, Gulshan Homz
“Long-time pending single-window clearance that can significantly reduce the overall projects cycle time needs to be addressed”. — Kamal Taneja, MD, TDI Infracorp
“Section 80EE provides a deduction of Rs 50,000 for the first- time home buyers if the property is not priced above Rs 50 lakh. We expect the FM to increase this tax limit or increase the limit of property value this year so that savings on taxation are increased and investment quotient of real estate is increased”. — Dhiraj Jain, Director, Mahagun Group
“The interim budget must address the issue of providing special incentives to projects offering eco-friendly concepts. This will promote green building concept amongst the developers and help environment as well”. — Gaurav Gupta, General Secretary CREDAI, Ghaziabad
“The government should focus on building policies on PPP model, co-development, taking over the stalled projects, land reforms etc to achieve Housing for All by 2022. The structure of GST, too, requires correction. The effect of GST on low cost & affordable housing is significantly impacting the financial planning of home buyers thereby affecting the overall housing demand adversely. The government should look into ways for infusion of capital in the sector in view of the dismal current situation.” — Rattan Hawelia, Founder & Chairman, Hawelia Group
“We expect the government to raise the allocated fund under the Prime Minister's Awas Yojana to at least double the amount set in last year’s budget. Increase in the income tax exemption limit to Rs 5 lakh and grant of industry status to the sector at this time will serve as a booster shot for the sector.” — Prateek Mittal, Executive Director, Sushma Group
“ The government should bring stamp duty within the purview of GST. Rationalisation of taxes is one of the most important factors that the real estate industry expects at this point.” — Sanyam Dudeja, Director, Jubilee Group
“The cost of capital is a major problem at this time and a reduced cost of capital with the grant of Industry status would impact overall project costs and costs to buyers. We also hope that the government will reduce the GST rate applicable to housing.” — R.K. Arora, Chairman, Supertech Limited
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