Moneycontrol Presented by Motilal Oswal
Days hours minutes
Nerolac
Presented by :

Co-Presenting Sponsor :

Capital Trade

Powered by :

Godrej Properties

Associate Sponsors :

Aegon Life
LIC Housing Finance
Indiabulls

Co-Presenting Sponsor

Capital Trade

Associate Sponsors

  • Indiabulls
  • Aegon Life
  • Image 3
| Source: Moneycontrol.com

In a first, homebuyers send Budget wishlist to FM, seek ‘primary secured creditors’ status

The letter says that even though the government has passed on a host of concessions to real estate developers with the intent to make housing affordable, builders, unfortunately, enjoy the reductions in cost rather than passing it to buyers

Vandana Ramnani @vandanaramnani1

For the first time, homebuyers have sent their wish list for Budget 2018 to the finance minister. Among other things, they have demanded that the government bring the entire real estate sector under the ambit of GST and ensure that builders pass on the benefit of input tax credit to buyers. They have also called for an amendment to the Insolvency and Bankruptcy Code 2016 and designating homebuyers as 'primary secured creditors'.

To ensure that data for delayed projects across the country is available, they have suggested that the government constitute an Empowered National Committee (ENC) to take a census of all delayed projects, categorise them into normal and high-risk categories and accordingly take necessary steps to speed up completion.

“We are writing to you as the preparations for the Union Budget 2018 - 2019 are in full swing. You are aware there are over two lakh homebuyers whose hard-earned life savings are stuck in different real estate projects across the country due to indefinite delay and fund diversion by builders. The middle class suffering homebuyers need relief from the mental and financial stress which they are experiencing on a day-to-day basis due to lopsided laws and policies, against the interests of home buyers,” as per the letter written by For Forum For People’s Collective Efforts to the finance minister Arun Jaitley.

The letter says that even though the government has passed on a host of concessions to real estate developers by giving them ‘infrastructure status’ and ‘income tax deductions’, with the intent to make housing affordable, the “builders unfortunately enjoy the reductions in cost rather than passing it to the buyers,” the letter says.

“It is recommended that henceforth the government should provide direct concessions to the buyers/consumers than to route it through the builders, who never have and never will pass on such concessions to the buyers, with GST and the benefits of Input Tax Credit (ITC) being a case in point,” says the letter.

Bring entire real estate sector under GST

“It is suggested that the government should endeavour to bring the entire real estate sector under the ambit of GST. Currently, real estate for which entire consideration has been received after the issuance of ‘completion certificate’ has been exempt under GST under Entry 5 of Schedule III of the CGST Act. It would bode well to have equity amongst all buyers (under construction / upon construction) by including stamp duty and other registration charges within the law,” the letter written to the finance minister Arun Jaitley says.

"The Goods and Services Tax has been implemented with effect from July 1, 2017 and with the provisions of ITC as a fulcrum upon which the law was founded, it was expected that the tax component on the house would be reduced. It may have already come to your notice that the builders are though charging 12% GST from the buyers they are not passing on the benefit of ITC. This has led to an added burden on the buyers of ongoing projects," it says.

The builder associations incur less costs due to ITC but despite that they have dithered from reducing prices. “You would agree that with GST and ITC available the prices of the house would come down, but in reverse it is being jacked up by the builders,” says the letter.

“The anti-profiteering authority needs to take stern action against the builders for enriching themselves under the guise of the new law causing loss to millions of gullible homebuyers. In addition, the builder associations should be informed that they should not fleece the homebuyers under the pretext of GST and complaint mechanism should be put in place to address the grievance of homebuyers in this regard,” the letter says.

Amend Bankruptcy Code 2016; make buyers primary secured creditors

Homebuyers have suggested that the government should immediately, either through the Finance Bill or otherwise, move an amendment to the Insolvency and Bankruptcy Bill, 2016, providing for homebuyers to be made ‘primary secured creditors’.

“These existing provisions of the Code have caused a negative sentiment amongst the homebuyers, which needs your urgent attention,” the letter written by Abhay Upadhyay, president FPCE and member CAC (RERA), says

Constitute an empowered national committee to keep a count of delayed projects

The government should constitute an Empowered National Committee (ENC), including representatives of the Government of India, consumer bodies, banks and Industry associations, to take census of all delayed projects, categorise them into normal and high-risk categories and accordingly take necessary steps to speed up completion, it says.

The ENC should also thereafter continuously review/monitor the progress of all such high-risk projects which will help send a clear message to the builders that the Government is keen and serious about project completion.

“This will bring back faith of the suffering homebuyers not only in your government but also in real estate industry which in turn will also have a positive effect on the economy as it will help in the revival of the real estate industry,” the letter says.

Section 24(b) of the Income Tax Act 1961 should be amended

Under the direct tax category, homebuyers have recommended that Section 24(b) of the Income Tax Act 1961 should be amended to provide for deduction of interest from Income from House property even after possession of the house is received from builder after more than 5 years i.e. to remove the limitation of five years for claiming deduction under this section.

“This limitation clause is punishing honest homebuyers for no fault of theirs as delay in getting possession is solely due to fault of builders and homebuyers has no role to play and on top if it he goes on to pay his dues to builders on time,” the letter says.

In the case where an assessee is paying both EMI and rent and the date for the scheduled handover of possession has passed, there should be a deduction for EMI paid from the total income of such assessee over and above any other deduction being currently provided, it says.

“Needless to say, double burden of EMI and Rent is breaking the backbone of a homebuyer for no fault of his and he has to compromise with health and education of his family,” it says.

Increase house rent allowance limit

The limit under section 10(13A) towards House Rent Allowance needs to be enhanced to higher of ‘either the actual rent paid or the allowance received’ in order to incentivize the salaried class, who have been the most honest taxpayers of the country, the letter says.

vandana.ramnani@nw18.com
Sections
Follow us on
Available On