H P Rama Reddy – Chairman, Reliaable Developers
As we near the end of a financial year, we look forward to the budget with great anticipation as it plays an integral part in all our lives. Similarly, the real estate sector, which is key to overall development of a country, has its expectations from the government. Real estate is a crucial sector in India and it contributes to a total of 6-7% of the GDP while generating a handsome amount of employment opportunities in the country. Realty in India currently provides livelihood to over 50 million people residing in the country and is expected to witness dynamic growth in the next four-to-five years.
However, over the last 2 years the Indian real estate has witnessed some dynamic reforms hitting the sector which has elicited mixed results for the sector. While, demonetization substantially slowed the sector by reducing the cash flow in the economy thus reducing the purchasing power of the consumers; the RERA ACT strengthened the consumers footing. On a macro level, the industry needs more stable and consumer friendly policies which will strengthen demand and boost the sector further. Introduction of the GST, capital gains tax, stamp duty et al have hampered the perception of the consumer towards the sector. It would thus, not be wrong to say that an additional tax rebate would help raise the confidence of the new home buyer. Further, multiple tax elements on purchasing a property like GST, registration, stamp duty etc., further increase the cost of the property resulting in consumers stalling their purchase decisions. Tax rebates on this front will help the sector immensely.
Realtors also yearn for an increase in income tax deduction limits for individuals who make regular interest payments against loans taken for acquisition or the construction of property. The tax deduction limit has recently witnessed an uptick – from Rs. 2 lakhs to Rs. 5 lakhs per annum; paving the way for a positive shift in the industry. This constructive change will fillip property sales, as it will help home buyers save significantly on home loans.
Real estate developers want rationalization of GST for properties that are already under construction. Post GST implementation, the Goods and Services Tax has risen to as much as 18%, discouraging home buyers and investors while stunting profit margins. The ideal slab concluded by realty players is 12%.
Last but not the least, every realtor’s vision, coincides with the Government’s initiative to deliver ‘Housing for all by 2022’. The demand for affordable housing is increasingly becoming one of the fastest growing campaigns in the country. However, although the demand is huge, the multiple hurdles attached have left developers hesitant to enter this segment. The execution for this initiative has been considerably slow. Overall progress will depend on ramping up existing urban infrastructure and fast-tracking regulatory approval procedures. It is important to remove these roadblocks in order to attain the potential growth in real estate and ensure that the government’s goal, ‘Housing for all by 2022’, is attained.
The above mentioned pointers if adopted in the budget 2019 will helps address the sectors pangs given the high intensity dynamism it has witnessed in the last 2 years, making it easy to operate and serve better to both the community and the economy as a whole.