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9 Practical Wishes from the Budget 2018 for the Real Estate Sector in India

9 Practical Wishes from the Budget 2018 for the Real Estate Sector in India

“Rera” is the only good thing which has happened over the years in India in the real estate sector. The Mother of all Industries has been neglected in a lot of ways, than one. Home Buyers and Investors have great hopes for the real estate sector in the forthcoming budget 2018. After introduction of GST both Home Buyers and Investors are feeling a heavy pinch for paying more than 17% as Stamp Duty and GST for buying a property. There is no clarity on Input Tax Credit and some developers are charging 8% and some are charging 12%. The entry and exit from real estate should be seamless and less taxing. The Government should look at transaction driven revenue.

Here are a few practical recommendations from Sandeep Sadh, CEO – Mumbai Property Exchange for the Real Estate Sector.

  1. Under Section 24 of the Income Tax, the exemption of the interest alone on the Home Loan should go up from the present Rs.2.00 Lacs to at least Rs.5.00 Lacs, this is suggested keeping in mind the average ticket size of the price of the apartment has grown 100% over the past few years. Also, the benefit of tax should be given from the date of booking of the property and not from the possession.
  2. TDS Deduction on housing rental income for Individual Home Owners should be removed and especially for NRI’s, Zero Income Tax on property should be considered on rental income as they have invested in India and this is their only income in India against the property. This will boost NRI Investment in the real estate sector as the NRI’s will not look at any other countries like Dubai etc. for returns on their Investment. Also this will rationalise the prices of rentals in Mumbai and other Metros and more and more people will be willing to easily begin renting out properties and also the demand and supply situation will improve. A lot of NRI’s lock up their apartments for fear of higher taxation and an upfront deduction of TDS more than 30% and which effects their Return on Investment.
  3. Stamp Duty charges should be reduced down to 2.5% from the current 5% as this will bring in more transactions and the revenue will increase for the Government. Since, the value of transactions has gone up the government is in any case being benefited.
  4. Property buyers should be allowed to do cross purchasing like one should be allowed to invest in Residential Properties from the Sale of Commercial Properties and from the Amounts Received from the Sale of Commercial Properties to Purchase of Residential Properties. Also buyers should be allowed to investment in both Commercial and Residential properties from the proceeds of one single property so that a good portfolio for the property buyers/investors can be built out.
  5. Individuals and Salaried Employees should be given 100% tax exemption for the rent paid towards taking the House on Leave and License/Lease basis especially in Metro cities. This will help people take a decision to lease the properties and avail tax benefits. This will encourage people to opt for leasing more.
  6. GST should be capped at 5% and Stamp Duty at 2.5% and the Home Buyer should get a set off for both in case of a sale and the purchaser should pay the same only on the incremental agreement value.
  7. Interest rate subsidy should be given for properties where the agreement value of the property does not go more than 70 Lakhs and with 20% Personal Contribution including Taxes, the loan of 50 Lakhs should be given at a flat Interest rate @6% for 25 years. This way, a middle class family can own a home and only pay a small EMI per month, instead of paying rent and can create an asset.
  8. Capital Gains tax to be clearly defined, either its Date of Allotment, Date of Agreement or Date of Possession. Presently, there are numerous judgements which confuse the home sellers and later they get into all sorts of income tax issues.
  9. NRI’s who are selling properties in India and repatriating funds overseas should be allowed to sell by deducting only the TDS which is due after the computation of Capital Gains as per the Income Tax Rules and Indexation, which should be computed and certified by a Chartered Accountant.

About Sandeep Sadh

Mumbai Property Exchange is promoted by Mr.Sandeep Sadh who has been in the real estate business since the year 1993 and has an experience in transacting in Residential Lease & Sale, Commercial Lease & Sale. The experience of transacting and having a practical approach at work in each segments of real estate has given Mumbai Property Exchange an edge over its competition.

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One comment

  1. Great insights into the issues and suggested resolutions for the real estate sector..If implemented would give the most needed boost the slagging real estate scenario.

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