The status of the real-estate sector signifies the health of an economy as it accounts for almost 7% of the GDP and employs around 15% of the total workforce with a multiplier effect on 270 ancillary industries. The second-largest employer in the country is expected to touch a market size of $1 trillion by 2030 and contribute 13% to the country’s GDP by 2025. The construction industry in India ranks third among the 14 primary sectors in terms of direct, indirect, and induced effects on the economy.
India Inc anticipates Budget 2021 to augment the momentum, propelling India towards a $5-trillion economy. Naredco, a real estate body, represented wish list to the government authorities spilling the industry expectations as follows:
Subvention scheme: RBI and the National Housing Bank should reconsider lifting the ban on subvention schemes for direct benefits to the home buyers.
Income tax deduction: Interest on home loans should be fully allowed under I-T deduction without any ceiling; current limit of interest deduction under Section 24 of IT Act, 1961, on housing loans of Rs 2 lakh should be either removed or increased to Rs 5 lakh. Loss from house property should be fully allowed to be adjusted against other heads of income or in case of unadjusted loss, it should be fully allowed to be carried forward to subsequent years.
Long-term capital gains: LTCG from the sale of house property should be taxed at 10% (provision similar to section 112 for equity shares) and the period of holding should be reduced to 12 months to qualify as long-term capital asset.
One time restructuring: Debt restructuring permitted by RBI comes with a caveat that makes the benefit unavailable to most units. Thus, request to do away with the standard unit requirement and permit restructuring for all units will have a positive impact
SWAMIH Funds: The corpus of Rs 25,000 cr is inadequate to meet the target of last-mile funding of estimated project cost of around `1.25 lakh crore. Many HFCs/NBFCs, if permitted, are ready to establish such funds that will grant faster sanctions.
Rental housing: Enhancement in HRA tax exemption; an accelerated depreciation rate for the rental projects, like in commercial buildings, and allowing ‘carry on’ of loss from rental income.
Tax benefits to rental housing developers: A 10-year tax holiday to be given to real estate developers on profits earned from rental housing or income from renting of housing properties to be taxed at a flat rate of 10% as it will revive investment and boost a slowing economy. Alternatively, the rental income should be made fully tax-deductible.
Boost SEZ: Extending notification date for IT/ITeS SEZs from March 31, 2025, withdrawal of MAT and relaxation of usage norms for non-processing areas will lead to green shoots
Affordable Housing: Increase completion period to six years and enable concessional lending rate. Extend interest subvention scheme on home loans for all segments to support home buyers. The monetary cap of Rs 45 lakh needs to be removed or amended up to Rs 1 crore.
External Commercial Borrowing: Raising funds through ECB route should be permitted for access to low-cost funding avenues.
Demand sustenance is crucial to keep up the momentum. The never before budget 2021 is brimming high on positive outlook wherein real estate sector aims to work hand in glove with the government.
(Source: Financial Express)
