High Expectations from the Budget in the Real Estate Sector in February 2017
A transparent real estate market in India coupled with strong economic growth is truly a success story. The Government should further reform and tighten norms for the real estate sector to protect the interests of the Investors and actual home buyers and NRI’s who are looking to invest in India in a big manner still and also certain reforms need to made to control to ensure low-quality housing pricing to appeal to the masses and government incentives are passed on.
A lot of proposals by the State and Central Governments are announced every year, but only a few see the light of the day, the Government should have a vision which is long term for the sole benefits of the Housing and Commercial Sector as improper policies in this sector can only reflect negative results.
With Union Budget round the corner, the Government should make its Policies firm and more centric to the Low-Cost Housing for the actual consumer and Strict but yet not Stern for the Developers.
The Developers and Builders in India have been having a field day with no control over built up and carpet areas, illegal property documents and constructions, possession related issues and many more illegal entanglements which have also been highlighted in RERA.
In Mumbai rules and regulations for Re-Development of old buildings and the Slum Rehabilitation should be made more lucrative for Investors and Builders as this is the only way the city can be cleansed.
The Government this year should act in ways, wherein the Low-Cost Housing and Primary Home Buyers Interest is protected first and Foremost.
A few expectations which one could have from the budgets are as follows:
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.1.50 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 200% 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 NRI’s should be a Flat Slab of 10% and a Tax Holiday of initial 3 years 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 in NRI Investment in the country and 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 rationalize 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 as more and more incentives are given and passed on to both the licensor and the licensee.
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 Rate of Return. Further, a standard deduction of 30% towards maintenance should be improved to 40% for local residents and 50% for NRI houses.
4. 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.
5. The buyers should be allowed to cross purchasing like one should be allowed to invest in
Residential Properties for 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.
6. Presently, a lot of builders are not making 1 BHK apartments across the city in Mumbai especially, and special incentive should be given to builders to make 1 BHK apartments less than 400 sq.ft Carpet Area. These smaller and affordable apartments are the lifelines for a lot of middle-class people who have to be by default in a particular location and because of the nonavailability they have to go to other locations creating an imbalance.
7. Individuals, Companies, Employees of Multi-National Companies should be given 100% tax exemption for the rent paid towards taking the House on Leave and License/Lease basis. This will help people take a decision to lease the properties and avail tax benefits if they cannot afford to buy the properties. This will encourage people to opt for leasing more and more which in turn will keep the real estate prices in a controlled state.
8. Buyers who buy real estate should be allowed to Exit/Sell after a span of 2 years with a lesser tax slab so that it becomes easier for them to exit and this way the black money can also be curbed. Artificial shortage of property is created and prices are hiked because of the Sellers inability to sell within a short span and pay a higher tax.
9. Commercial and Retail Premises given to Banks/ATM’s should be exempted from Property Tax as they are given for longer periods of time and lesser escalations in the license fees.
We require Policy Changes which will further strengthen and fortify the Growth of the Economy in the coming year and with the able leadership of our Prime Minister Mr. Narendra Modi, we shall hopefully see a “New Awakening in the Government” and it’s Far and Deep Sight in understanding and implementing policies this budget.
Sandeep Sadh – firstname.lastname@example.org – 9820030685