Real Estate’s Wish List from Arun Jaitley in Budget 2017

Real Estate developers want income tax incentive for first time buyers, ease in tax slabs, clarity on GST and beneficiaries under PMAY, expansion of affordable housing concept

By Asit Manohar

Expecting populous budget on February 1 from Finance Minister Arun Jaitley, like any other sector or industry, Indian realtors have also put their list of demands from the budget 2017. Apart from age old demand for industry status to the real estate Indian realtors have demanded clarity on GST, income tax incentives for the first time home buyers, rise in house rent deduction limit and higher tax saving on housing loan and house insurance premiums. This budget, real estate developers also want clarity on beneficiaries under Pradhan Mantri Awas Yojana from the Modi government.

Expressing the expectation of Indian real estate developers from the budget 2017 Anuj Puri, Chairman & Country Head, JLL India — leading realty consultancy in India said, “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.” He demanded clarity on GST citing, “While the GST 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.”

Demanding rise in house rent deduction limit Puri of JLL India added, “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.” He also demanded the government to clarify beneficiary of Pradhan Mantri Awas Yojna citing, “The government recently announced that interest rates of 3 percent would be applicable on loans of up to Rs 12 lakh and 4 percent 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.”

Expecting a common man’s budget on February 1st, Deepak Kapoor, President, CREDAI-Western UP said, “It’s time now to expand affordable housing concepts and increase the benefits for other segments. At present, only the EWS and LIG segments have access to the PMAY benefits, and still there is a large segment of youth population which is in dire need of an abode at low cost, and they don’t fall under such categories.” The Director of Gulshan Homz further said that industry status for the realty sector has been long awaited and it would be a game changer for the sector if it is granted this time adding, “Clarity over the slab of GST where the realty sector will fall is still uncovered.”

Demanding ease of taxation slabs Avneesh Sood, Director, Eros Group said, “This time we are predicting the government to ease the taxation slabs and provide higher spending power to the consumers that will indirectly benefit the economy and the realty sector.”

Pradeep Aggarwal, Chairman, Signature Global said, “Union Budget 2017-18 is expected to bring cheer to the masses in the country. We have just witnessed banks reducing lending rates and the government also promoting affordable housing for EWS and LIG categories by providing special interest rate reductions. This year’s budget will focus upon improving infrastructure in the country in order to bring smaller regions into the limelight.”

Demanding clarity on regimes announced in 2016 and tax sops for prominent buyers vikas Bhawsin, MD, Saya Group said, “Rebates on income tax, clarity over GST and RERA, easing norms for FDI, making route for REITs and InvITs easier and passage of the long awaited land acquisition bill should be in plan for the upcoming budget session 2017-18.”

Keeping a hawk eye on rising construction cost in real estate sector Dhiraj Jain, Director, Mahagun Group said, “This Union Budget, policies for allied industries such as steel and cement needs to be standardised as it indirectly affects the cost of housing units. Also, tax deduction limit for housing loans of Rs 2 lakh is quite less especially for major Tier 1 cities where ticket sizes cross 1 crore in several cases. This limit can be looked upon along with reduction in stamp duty charges to allow higher savings.” Urging government to look into the tax slabs he further added, “Changes in the tax slabs are pretty much on the cards that will allow young working class to look at the real estate as an avenue for investment or even residing.”

Expressing infrastructural development as the core aim of the government for this Budget Ashok Gupta, CMD, Ajnara India said, “Huge amount for infra development may be announced this year as well especially for developing regions of the country falling under AMRUT scheme.” He said that more incentives for digital means of transacting should be promoted by the government and what else than this budget could be the better platform to do this?