Union Budget 2017-18 - Real Estate's Expectations
by Mr. Anuj Puri, JLL India
1. Provide
clarity on beneficiaries under Pradhan Mantri Awas Yojana
The government
recently announced that interest rates of 3% would be applicable on loans of up
to Rs. 12 lakh and 4% on loans of up to Rs 9 lakh, under the Pradhan Mantri
Awas Yojana (PMAY).
Now, two new income categories can avail higher loans with
interest subsidies. The Budget should give more clarity on the actual
definition of beneficiaries who can avail of these benefits.
For example - would
young urban professionals hoping to buy their own apartments but not belonging
to either the EWS (Economically Weaker Section) or the LIG (Low Income Group)
segments be allowed similar sub -ventions?
Also, affordable housing is largely
available in the fringe areas of metros and tier-II, III cities. Would certain
redevelopment projects within metros meeting the affordable housing definition
be granted similar benefits?
2. Provide
income tax incentives for first-time home buyers
Can a first-time home
buyer looking at an affordable project get additional income tax incentives for
at least five years?
The Budget should throw more light on this. Any efforts in
this direction would help the government move closer to its objective of delivering
‘Housing for All by 2022’.
Also, given the lack
of institutionalized rental housing in Indian cities, such a move could spur
many fence-sitters into moving out from their rented apartments to owned homes.
It could also encourage more developers to come up with products suiting these
segments.
3. Provide
higher tax saving on housing loan and 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.
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| Anuj Puri, JLL India |
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.
4. Provide
clarity on GST
While the goods and
services tax (GST) tax structure has been announced, the real estate industry
is waiting with bated breath to see which tax rate is applied to the real
estate and construction industry.
Clarification would also be needed on the
abatement scheme, and whether credit for input tax would be allowed if the
composition scheme has been availed by developers.
5. Ease
tax reporting and tax slabs
The government, with
it mantra of maximum governance, should look at easing the tax reporting
structures in the upcoming Budget. Also, the benefits of demonetisation
exercise should be passed on to the common man in the form of easing of tax
slabs and offering some higher degree of rebate.
With the earlier stated
intention of reducing corporate tax as well, the idea is to widen the tax net
while simultaneously reducing actual tax incidence.
6. 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.
About the author..
Mr. Anuj Puri, Chairman & Country Head, JLL India
For media contact
Arun
Chitnis
Head –
Corporate Communications & Media Relations
JLL
India
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