Since the last couple of years, real estate in India has seen new policies and reforms being implemented. The primary objective of these reforms was to promote growth and increase transparency, which, it was hoped, would help improve the overall economic growth of the country.
In the 2017 Budget, the real estate sector applauded the announcement affordable housing would be accorded infrastructure status. They also appreciated the increased focus on infrastructure development and policies aimed at improving investor sentiment and private participation in development projects.
While more than a few larger issues were addressed in last year’s finance bill, the sector hopes for clarity on the way forward on various other aspects during this year’s budget. Things that could aid sustained long term growth.
The industry body Naredco or the National Real Estate Development Council has asked that infrastructure status be granted to middle income housing of 120-m and 150-m carpet area.
This will allow the industry access to cheaper funds, like in the case of affordable housing. Also, developers are now talking about enhancing bottom lines and getting their balance sheets to look better.
The government has differentiated between affordable housing, which is 30-m and 60-m carpet area, and middle income housing. The infrastructure status granted in 2017 has resulted in nearly 37 lakh houses being sanctioned. However, this has not made a favourable impact in overall affordable housing.
The industry’s budget wishlist also contains some problem areas resulting from poor on-ground management. Industry associations have has asked for circle rates as a concept to be scrapped. They claim it does not reflect the true sale value as it is not revised often enough to reflect market reality.
Faulty circle rates or guidance values have been a thorn in the flesh of property buyers and sellers, they say.
Naredco has also put in a demand for a structured rental housing policy that allows institutional players or government agencies to manage rental housing in affordable categories. The biggest challenge here, according to observers, is that there isn’t enough affordable land. If the government works on the proposed model, they may be able to bring land at affordable rates and thus create housing that is affordable.
As far as taxes are concerned, the real estate sector is hoping for an extension of tax benefits under Section 80-IA and Section 35AD to integrated township projects. Similarly, they hope that affordable housing will be exempt from service tax under GST, in view of the Government’s scheme ‘Housing for all by 2022.
Lastly, the real estate sector hopes that this year’s budget will finally address a long pending request of the sector - granting it infrastructure status.
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