by Neeraj Bansal, Director, KPMG
India
The Indian real estate sector contributes about 5.5% to the GDP (Gross
Domestic Production) and supports about 250 ancillary industries including
cement & steel.
Inclusion in the Harmonised Master list of Infrastructure would provide
developers with better financing options as infrastructure financing
institutions (Like India Infrastructure Finance Company Limited), banks and
housing finance companies (HFCs) would be able to offer debt at lower interest
rates to the sector.
Real Estate Regulatory Bill..!
Another key expectation on the regulatory front is the enactment of the
Real Estate Regulatory Bill, if implemented could streamline the project
clearance process. In addition, it aims to bring in more transparency and
accountability into the sector which can result in increased investor
confidence and spur housing demand.
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| Neeraj Bansal, Director, KPMG India. |
The budget must also lay an emphasis on augmenting the supply of affordable
housing – given the magnitude of urban housing shortage in the India. Extending
section 80-IA of Income Tax Act 1961 (IT Act) for projects offering affordable
housing up to a carpet area of 60 square meter would entitle private developers
to a 100% cent tax holiday for 10 consecutive assessment years.
Formulation of a Special Residential Zone (SRZ) policy, on the lines of the
sops extended to special economic zones (SEZs) should be considered. Further to
stimulate demand, housing loan interest rates should be brought down to
acceptable levels and relaxations in terms of service tax & stamp duty
should be provided to affordable housing buyers. There is also a need to
increase the income tax exemption limit for interest paid on home loans from
Rs. 1.5 lakh to Rs. 3 lakh.
Another area which needs to be covered in the budget is moderation of the
impact of rising raw material prices. Input costs of steel, cement, sand,
bricks, etc..!, have witnessed price escalation of 50% in the past 2 years.
Towards lowering construction costs for developers, the following could be
considered:
*^ Specific allocations for digitisation of land records as clear land
titles could remove hindrances in land acquisition.
*^ Rationalisation of levies such as external development charges,
infrastructure development charges, land conversion charges, etc.
* ^Subsidies for adoption of innovative technologies and materials such as
pre-fabrication which can help in constructing houses quickly and cost
effectively.
The author is Director – Real Estate, KPMG in India.
