Real Estate Industry Wants PMAY’s Credit Linked Subsidy Scheme Extended by 2022
The real estate expectations are quite high as Finance Minister Nirmala Sitharaman is going to present the Union Budget for 2021-22 on February 1, 2021 amid Covid-19 pandemic.
The economic slowdown and loss of revenue due to nationwide lockdown affected the real estate industry as the industry is slowly coming back to the track the budget is expected to boost buyers’ sentiments. Here is what the industry expects:
Dr. Niranjan Hiranandani, National President, NAREDCO
The on-going Covid-19 pandemic has impacted global economies and Indian real estate is not spared from the depths of despair. The fiscal impetus announced under Aatmanirbhar Bharat has led to renewed consumer demand that led to the emergence of green shoots in Indian economy and real estate sectors. The laudable measures like tax rationalization, additional stress fund, ample liquidity tools will keep the momentum going and propel India towards a $5 trillion economy. Towards this goal, NAREDCO seeks to work hand-in-glove with the government to achieve this ambitious goal.
Rajeev Talwar, Chairman, NAREDCO
Interest on housing loans should be fully allowed under Income Tax Deduction without any ceiling. The current limit of interest deduction under Section 24 of IT Act 1961 on housing loan of INR 2 lac should be removed to incentivise home buyers and spurring overall demand. Also, loss from house property should be fully allowed to be adjusted against other heads of income. In case of unadjusted loss, it should be fully allowed to be carried forward to subsequent years.
The RBI, through a notification in 2017, allowed a Loan to-Value ratio (LTV) of up to 90% for home loans for affordable houses of Rs 30 lakh or less. Same facility should be permitted for other housing including MIG and HIG as well.
Bijay Agarwal, MD, Salarpuria Sattva
The year, 2020 has changed the normal course of life due to COVID-19 pandemic. The real estate sector has faced unprecedented challenges since the outbreak of the pandemic in India earlier last year. The government and regulators have continued to provide with fiscal and policy support to the industry.
Land is an important resource for any real estate development. Any developer has limited resources to acquire land with 100% ownership. The alternate resources for any development is joint development on area basis and for revenue sharing.
Since the implementation of GST on T.D.R is being interpreted for application of GST on transfer of right to develop the land. Due to these amendments, most of the projects either residential or commercial has reduced significantly.
During this budget if there is a relaxation on GST for joint development transaction on T.D.R, it will be a huge benchmark for developers to take up projects for development. Thus, will also bring huge employment directly and indirectly in the country.
Presently the input on GST has restricted. The government should consider allowing input of Commercial GST against the rent receivables. Also, waiver on the applicability of GST on T.D.R. allocated by the government as well as market purchases to improve the production potential for any project.
PMAY’s Credit Linked Subsidy Scheme (CLSS) which is currently extended until March 2021, is expected to be further extended until March 2022 for another year. This will only further benefit the low income group planning to buy a house to avail the CLSS subsidy.
Industry status to the real estate sector will further boost the increasing of low-cost funds, cut capital costs and make land acquisition easier, passing the benefits to consumers. To speed up project execution, a single-window clearance system can aid.
Mohit Goel, CEO, Omaxe Limited
The Union Budget 2021-22 will play a pivotal role in sustaining the revival process of the Indian economy which witnessed one of the worst economic slowdowns in 2020 due to the COVID-19 pandemic. The government must accelerate investment in infrastructure development in State Capitals and tier 2/3 cities so that these cities can emerge as the alternative centres for business and employment. India’s urban population is expected to grow to 590 million by 2030 and massive effort and investment in urban rejuvenation will be needed including from the private sector. The government must encourage private sector investment in these cities by opening avenues and providing tax breaks and incentives in areas like real estate, IT, BPOs, retail, banks etc. Metro Rail, expressways, multi-land use projects, integrated townships, commercial and residential redevelopments are some of the areas the government must look towards.
The government and RBI’s efforts have led to some uptick in home sales and overall consumer spending. Increasing tax exemptions on the back of low interest rates and bottomed out property prices could propel demand for homes further.
Achal Raina, COO, Raheja Developers
All through 2020, the government came up with a slew of announcement and measures to streamline the sector and to provide liquidity solutions to the stuck projects; the sector now has high hopes from the upcoming budget. It is expected that the government will take last year’s thought and action forward to come up with the announcements that can be implemented in the short term. The first and foremost need is to see that the process of permissions get resolved through single window clearance, a demand that has been there for quite some time. Authorities responsible for giving permissions can also be brought under the ambit of RERA to make sure that the permissions do not take much time; this step can be an option if single-window clearance is not announced.
Real estate sector needs support of the government wants every Indian to have a house. Escalating costs and delays are the biggest hurdles; government must step in through income tax incentives, to the developers, rightly priced land, availability of land in major cities for affordable housing, and so on. The list of expectations is endless because the goal is large – to provide houses to everyone in the budget that they can afford and still not compromise on the amenities or the deadlines given to the buyers.
Anshuman Magazine, Chairman & CEO, India, South East Asia, Middle East & Africa, CBRE
The dynamics of the RE sector and its stakeholders witnessed a significant impact due to the COVID-19 pandemic; however, we do believe that 2021 would pave the way for opportunity and recovery. Budget 2021 could go a long way towards meeting this goal by way of introducing tax reforms such as enhancing the principal deduction limit on home loans under Section 80C of the IT Act, 1961; lowering the long-term gains tax for sale of house property and rationalizing the GST for under-construction properties. The government could also consider increasing the corpus of SWAMIH fund to provide last-mile funding to residential projects as well as undertake deep restructuring of RE-related loans to smoothen the repayment process such as easing payback of redemption premiums. Enhanced focus on the RE sector would have a far-reaching multiplier effect on the economy as it has forward and backward linkages to over 250 ancillary industries.
Rajat Goel, JMD, MRG World
We hope that the FM will focus on the affordable housing segment, which has the highest demand. The segment saw a maximum number of launches and sales after the pandemic; people are eagerly waiting for more projects to come in this segment. With the Government’s focus on Housing for All, we are sure that the FM will ease the burden on common man also as they are the ones who need more liquidity to buy these projects. We hope that there will be necessary tax exemptions, stamp duty reductions, and increase in tax deduction under 80C that will help the common man to have more disposable income. From the developers’ point of view, we expect that the FM will give income tax holiday to developers working in this segment and reduce stamp duty for land purchase in affordable housing.
Vikas Jain, CEO, Labdhi Lifestyle
The real estate sector definitely needs a boost, which the Budget 2020 can provide. Residential sales of regions like Wadala, Neral, Karjat, etc. have been performing fairly, but decreased pressure on the home buyer, as well as the developer, will help in revival of the sector. Although the government took necessary steps; such as announcing Alternative Investment Fund of Rs. 25,000 crore, PMAY scheme, some repo rate cuts, etc., there is an increasing need to revise the taxation policies and allowing one-time rollover loans to solve the liquidity issue. We expect that the government will help the sector in raising funds and allocating them properly. Also, we hope Finance Minister Nirmala Sitharaman will announce measures that would help with GST and other tax benefits, which will encourage the confidence of the sector. This will impact in increased sales of residential properties.
Dhiraj Jain, Director, Mahagun Group
Currently, the deduction for principal repayment of housing loan is Rs 1,50,000, and the deduction is clubbed with other tax saving instruments. We hope that the Government will increase the deduction under section 80C for principal repayment of housing loan from the existing limit of Rs 1,50,000; this will encourage the home buyers to expedite their buying decision.
Ashok Gupta, CMD, Ajnara India
We are looking forward to the industry status and steps in the direction of single window clearance. It will also be a perfect situation if the GST is revised for construction materials such as cement to make them more affordable. The most important aspect is the approvals related to the projects; many times it becomes difficult for the developers to deliver projects within a stipulated time due to late approvals. It should be mandatory to have a time-bound approval system in the sector. Also, this Budget must also aim at increasing the present savings limit so that the people get higher spending power, and look at real estate as an investment option.
Prasoon Chauhan, Founder & CEO, BlackOpal
The second largest employing sector of India, real estate needs support from government to resolve the liquidity issues at the earliest. One of the recent aid extended to the sector has been in the form of a Rs 25,000 crore AIF set up for stalled projects. While the motive behind providing this aid has been to fasten the delivery timelines, but the slow disbursement of funds is rather acting as an obstacle. Therefore, a strategised plan for implementation is needed to speed up the deliveries.
Additional support from banks is also needed in terms of providing quick funding to the realtors. This budget should look into establishing a process that caters to realtors receiving timely funds from banks, without any delays from authorities in documentation, permissions and grants. The government must consider bringing subvention scheme into function to bring some momentum in the purchase of new homes. Single window clearance has been a long standing demand for the real estate sector. There is a need to look into the execution and permission timeline from the end of authorities, RERA being the regulatory body must question and assess them upon their execution.
Source : MagicBricks