by Mr. Anuj Puri, Chairman & Country Head, JLL
India
The Union Budget 2016-17 is an
eagerly-awaited annual event which Indians follow closely, as the decisions and
allocations announced by the Finance Ministry have great pertinence to both
individuals and industries.
The real estate sector is sensitive to many of policies that are announced
both for various industries and individuals. The realty sector is just emerging
from a prolonged and painful slowdown, and is looking for all and any signs of
light at the end of the tunnel. This fact makes Union Budget 2016 all the more
critical, and the real estate industry has many expectations from it.
· Offer financial protection
from project delays to home buyers
The Union Budget should pay specific heed to this pressing need. On
purchase into an under-construction property, buyers can only claim tax
benefits of Rs. 2 lakh after possession if construction is completed within
three years.
The benefits reduce to Rs. 30,000 if the builder delays construction beyond
this - and they pay higher interest. First-time home buyers purchasing
properties for self-use additionally pay rent.
Instead of allowing home buyers tax
benefits post-possession, the Union Budget should make a provision that allows
these from the time they start paying interest on housing loans. This will ease
their monetary burden considerably and make increase the velocity of home loan
disbursements.
Similarly, if an under-construction property is purchased from capital
gains, its construction must be completed within three years of its sale to
avail exemption. There can be delays by developer in such cases too. These
deductions should be brought at par and the construction timeline should be
extended from the current three years to five years.
· Provide more tax saving on
housing loan & house insurance premiums..!
The government should increase the tax deduction limit for housing loans,
especially for buyers in metropolitan cities.
The current limit of Rs 2. lakh is insignificant given the ticket sizes in
cities like Mumbai, where most houses are priced at Rs. 1 crore and above.
Also, tax concessions on house insurance premiums could be introduced to
encourage end users to insure their homes.
Similarly, the tax exemption limit should be increased by about Rs. 1 lakh
and be auto-set to match inflationary trends in a financial year.
· Raise house rent deduction
limit..!
Salaried persons get house rent
allowance (HRA) as a component of their total salary, and can therefore claim a
deduction. This deduction can be substantial in cases where the salary and its
HRA component are higher.
However, self-employed persons and
those who draw lump sum pays without an HRA component can only claim a maximum
deduction of Rs. 2,000 a month under Section 80GG. The Budget can and should
address this anomaly.
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| Anuj Puri, Chairman & Country Head, JLL India |
· Provide more incentives to boost
development and consumption of sustainable real estate
The Budget should provide clear and convincing benefits to buyers of green
real estate in the country.
Stakeholders of the residential real estate sector definitely require more
encouragement to press the 'green' button. Most home buyers in India are averse
to paying an extra premium for such projects, and the low demand means that
developers are not sufficiently active in this segment.
The Budget should provide a combination of incentives to boost the
development and buyer interest in green real estate in the country.
· Make additional allocation for
infrastructure development in peripheral areas of metros
Although the previous Budget prioritised affordable housing, the upcoming
Budget should allocate an amount specifically for building infrastructure and
improving connectivity in the peripheral areas of cities, especially the
metros.
Without this, it will be difficult to provide affordable housing in the
cities. Developers entering this segment should be allowed cheaper financing
options, thereby also providing a shot in the arm for government’s ‘Housing for
All by 2022’ target.
· Remove the DDT bottleneck in REITs
Despite the announcement last year, there has not been a single REIT
listing in India to date. The primary reason is the presence of Dividend
Distribution Tax (DDT). While the government has worked towards removing other
bottlenecks, DDT has remained a key pending issue.
Developers and other asset holders need the government to do away with it
in the Budget 2016. Until this vital change is made, REITs – which can almost
single-handedly revive the Indian real estate sector – will remain pipped at
the post. To aid the faster revival of the real estate sector as well as to
provide a significant boost to the economy in general, the Budget must address
this issue.
· Provide clarity on GST implementation
and eCommerce..!
The Finance Minister should announce a specific date for the implementation
of GST. This major reform will give the industry a very clear taxation
structure and induce a major sea change for the logistics architecture, since
logistics will be driven by cost and not by a regulatory regime.
eCommerce is booming in India, but different states currently have varying
definitions and laws on eCommerce.
A common definition as well as law is needed to govern this sector and help
companies operate more efficiently. Such a move will help start-up firm up
their investment plans, as well.
· Provide sops for the retail industry
to induce vibrancy..!
The retail industry wants also seeks the earliest implementation of GST.
Also, eCommerce and offline players need a level playing field.
Sops should be given to the retail industry to induce the kind of vibrancy
evident in countries like Dubai and Singapore, which have shown successfully
how one can tap the retail sector to attract tourists.
Arun Chitnis
Head – Corporate Communications & Media Relations
JLL India
Pune - 411 001.
Tele: 020 3093 0441 Fax: (020) 4019 6101
Mob: +91 96571 29999
Website: www.joneslanglasalle.co.in
Twitter: @JLLIndia
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