It’s that time of year when people begin to have an open ear, eager to know what the Finance Minister has up his sleeve. Players in the real estate market, too, are ready with their wish lists, but experts believe it would be unfair to expect much from the government this year, thanks to the kind of government fiscal deficit it faces. However, what developers hope that the budget is sufficient stimulus and standard operating procedures to help the sector achieve the desired growth rate. Even consumers interested in buying property or investing in real estate expect the Finance Minister to spell out some consumer-centered policies.
The government is having a tough time managing its fiscal deficit. “To hold that the government has two choices: increase income in terms of tax collection, and reducing or controlling their costs. Therefore, it is unlikely that the government will come out with no tax benefit for property sector roots itself.
Hopes, however, is high. Navin M Raheja said, CMD, Raheja Developers Limited, “We expect the interest deduction on housing loan, under section 24 of the Law on Income Tax should be revised from the current limit of Rs. 1.5 Lakh to Rs. 3 Lakh.
Redefining Real Estate The label of “infrastructure”, formerly used by the government and all financial institutions authorized to take property for financing municipalities and easy residential and commercial buildings. , Says Anil Sharma, CMD, Amrapali Group, “This (the label infrastructure) seems to have disengaged from the estate since the time land and property prices began to spiral.
A change in the definition of the property sector as a result of these activities are classified as ‘outside’ the (infrastructure) sector. The immediate result was that the banks could not lend for real estate activities in the same way they would for the infrastructure companies, despite construction of new municipalities is similar to the construction of infrastructure facilities. In the current slow market, it may be desirable to restore the definition of the real estate business contained in the Foreign Exchange Management Act (for real estate which is regarded as infrastructure).
Affordable Housing Affordable Housing should receive a boost. “The government should offer tax incentives for smaller units and therefore the applicability of section 80IB should be extended until 31 March 2010. Therefore, the tax exemption applies to projects sanctioned to 31 March 2009, “says Raheja.
Furthermore, “mass affordable housing is integrated development of infrastructure. Major real estate projects of the municipality have a long gestation period that requires an investment over a long period of time. Integrated development of affordable housing projects is almost similar to the development of special economic zones with the full set of infrastructure services, “says Sanjeev Srivastava, MD Assotech Ltd. Consequently, “the developers of affordable housing is necessary to provide incentives for the creation of such infrastructure in the country. Therefore, the integrated development of affordable housing projects should be granted the status of the infrastructure for the purpose of RBI, SEBI, IRDA and CBDT. Income tax under Section 80-IB is available to developers of affordable housing. This facility was discontinued from April 1, 2008. This concession was highly successful in giving a boost to affordable housing but since state laws were not permitting higher densities, the benefit of it could not be realised to the fullest possible extent. Now almost all state governments have relaxed their density norms, (therefore) revival of concessions under Section 80IB would give boost to affordable housing.
Consumer advocates are also demanding a reduction in stamp duty. “Reduction of stamp duty to 2 per cent will result in an advantageous position for both the government and consumers, as there will be more operations, and government revenues will increase. As the value of transactions has increased manifold in recent years, revenue will have no impact because the rate reduction, “said Nitin Saxena, President of All India Consumer Education Society.
Consumers view of consumers are eagerly looking forward towards a reduction in home loan EMI in the next budget. “Agreed that the Finance Ministry does not have much say in the independent functioning of banks. But the next budget can have a notification that the difference between the first time and those that go into a home loan for the second time so that your loan payments go. Let’s say, that can be 7 percent (the interest paid on loans) for a first down 7. 5 percent for the afternoon