Pre
Budget 2016-17 opinion provided by Dr. R.Kumar, Managing Director NAVIN’S
In general what is expected out of this budget
can be classified into 3 aspects namely:
·
Tax related issues
·
Policy related issues
·
General issues
Industry status to the real estate sector is a
long pending demand of the Real estate industry to give it an industry status,
to enable the industry to raise finance and other financial institutions on par
with other industries.
Prime Minister Modi had over 2 years back
announced the housing for all scheme. Already 2 years has passed and by
2022,there are only about 6 years left to achieve this dream. Simple SOP’S and small
conclusions are not going to help in achieving his dream, if one is serious
about it.
Major and quantum changes in policy,
administration and taxation structures are essential to bring about a change
and give a boost to this sagging industry.
 |
| Dr Kumar, MD and Chairman, Navin's |
The minimum expected changes would include:
Infrastructure status for housing. The housing
industry by getting this status will enable banks to provide priority sector
lending and bring taxation benefits to the sector.
Another policy level change may be required to
exempt housing, construction industry from service tax or fixing a lower level
of GST specifically for housing.
A way has be found to provide this relief for
the housing sector as the introduction of GST is likely to have cast a higher burden on the home buyers. This
move will directly benefit home buyers.
Policy changes for providing input credit for
registration and stamp duty for housing projects. The developer buys the land
only for the purpose of developing a housing project and selling.
Now the
process involves paying stamp duty twice, 1st by the developer and 2nd
by the home buyer.
This pushes the cost of a home further by 4 % to
5%, if we want more homes to be bought, this justifiable relief has to be
provided for all home buyers.
TAXATION
RELATED ISSUES:
Like in deduction, limit on home loan interest
with the housing costs being phenomenally high in all major cities from 50
Lakhs to 1 crore and more ,it is necessary
to increase the exemption limit on the housing loans from 2lakhs to 5
lakhs.
Further ,the 3 year limitation for possession of the home (constructed)
shall be removed, as the home buyer is unnecessarily getting penalized for no
fault of his.
The deduction shall be made available from the
first EMI itself and shall continue until completion of the home loan.
Similarly the deduction limit for repayment or home loan shall be at least
3lakhs to 5 lakhs.
House Rent Allowance:
The house rent allowance allowed for deduction
to incometax for self-employed individuals and small entrepreneur’s from the
present limit of 2000 to be equitable to the salaried class or the actual rent
paid based on rental receipts.
Completely remove the dividend distribution tax
for RITES. This issue has been holding back formation of RITES in this country.
General
issues:
Administrative reforms, immediate introduction
of single window system for approval of real estate projects is a must.
India ranks bottom 184 out of 189 countries in
ease of getting construction permits.
Drastic steps are required to cut down red tape
and approval delays with involvement of multiple agencies.
Single window clearance with prescribed limits
for approval has to be made mandatory for all state government to adopt.
Authorized architects, licensed engineers or
licensed program architects to approve building plans in a measure that shall
be introduced. This will pave way for eradication of the rampant corruption and
delays in issue of planning and construction permits.
Green
Clearance:
The Govt. has already announced certain
simplification for issue environmental clearance for real estate projects
limiting them to 6 to 8 parameters.
However,as a further step to increase the
ease of doing business in real estate, Real estate projects within major
cities,which are covered by a master plan /structure plan/detailed developed
plan can be permitted by the approving authority themselves through single
window clearance if confirmed to the mater plan/detailed development plan.
They
need not be treated on par with green field projects and ecologically sensitive
projects as cities are meant for people to live/work and play.
Encouragement to green buildings incentives in
the form of waiver of approval fees and other benefits may be provided as
incentives to encourage green buildings.
Archived provisions like adoption of guideline
value or circled status for determining capital gains, tax and deemed income
tax on the buyer have been having a big impact and negative pressure on land transactions.
This budget shall categorically remove such
pressures as the guideline values have been provisioned. Investment inn
improvement of infrastructure like roads,water supply and sewerage in peripheral
areas of cities are essential to serve, the developments which are taking place
in the outer peripheries of the city.
Creation of such infrastructure will also
move land for development thus possibly help in bringing down land prices by
increasing it supply.
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