The last few years have witnessed a major downfall in the real estate sector owing to demonisation, GST, RERA, NBFC crisis, says Sanjay Daga, COO, Runwal
The real estate sector is confronting crippling liquidity for a long time. A relaxation in norms for raising capital, tax incentives for home buyers, reduction in housing finance cost through preferred interest rates, continuing subsidies under Pradhan Mantri Awas Yojana (PMAY), and paving the road for the quick availability of Alternate Investment Funds (AIF) are some of the relief measures the sector expects. These initiatives will put more money in buyers’ and developers’ hands, stoking the revival in the sector.
Real estate firms shared their expectations from Budget 2021 with Firstpost.
Alok Saraf, Associate Partner, Grant Thornton Bharat LLP
The real-estate industry, passing through protracted recession even before the pandemic which worsened it manifold, pins its hope on the Budget for swift revival. The sector expects a two-pronged approach from the Budget — a just GST regime for the industry for bringing down the cost, and ample liquidity for generating demand. A rational GST regime, with temporary waiver or reduction in GST rate for retail home buyers and allowance for availing input credit during the construction of commercial properties to commercial leasing and rental segment, will pare down the construction cost for the sector leading to a boost in demand.
Shishir Baijal, Chairman and MD, Knight Frank India
Section 80 C tax deduction on home loan principal repayment does not provide for a focused benefit on housing. A separate annual deduction of Rs 150,000 will provide the much-needed fillip to opt for house purchase. The credit-linked subsidy scheme (CLSS) has ensured a remarkable increase in the activity level in the affordable housing sector. Given the COVID-19 pandemic disturbances and a likely two-year time frame for the economy to recover from the impact, the deadline for the CLSS scheme should be extended by two years up to 31 March 2023. Given the relatively higher house prices in major cities, the upfront amount of the CLSS subsidy should be increased to Rs 3.5 lakhs (from the current level of Rs 2.3-2.67 lakhs depending on the income category) with corresponding enhancement in income criteria which shall make the subsidy amount more significant in comparison to the house value.
Ashok Mohanani, President – NAREDCO, Maharashtra
Developers and buyers hope that the upcoming Union Budget will introduce reforms like tax sops and correction in prices which will further benefit and stabilise the industry. The industry expects if 1 percent GST for affordable housing can be extended for another fiscal year along with the removal of 45 lakh cap will surely be a great deal for Affordable Housing segment; from the perspective of first-time homebuyers, we expect the full benefit of interest to taxpayers should be provided; look forward to re-introduction of GST with an input tax credit on under-construction properties which will generate the demand among homebuyers.
Farshid Cooper, MD, Spenta Corporation
While the government and the concerned authorities have been introducing initiatives and measures to alleviate the stress faced by the sector, we hope that Budget 2021-22 is a ‘comeback’ Budget for the Indian economy. The focus should be on the added impetus for affordable housing, addressing the liquidity concerns that currently plague the industry and tax breaks or reduction of transaction costs for home buyers.
Rohan Khatau, Director, CCI Projects Pvt Ltd
The government should consider lowering the GST rate for under-construction projects. This move will incentivise home buyers to purchase their dream home and boost sales, thereby contributing to the GDP. The Maharashtra government’s move to cut stamp duty is an exceptional example of how it helped revive residential sales. We expect rapid infrastructure development to magnify real estate in MMR.
Sanjay Daga, Chief Operating Officer, Runwal
The last few years have witnessed a major downfall in the real estate sector owing to demonization, GST, RERA, NBFC crisis. The government’s move in giving infra status to affordable housing would be beneficial to the buyer by providing them with reduced and long-term funding with easy approval of loans. The benefits of tax waivers in stamp duty, and lower home loan rates will play a pivotal role in generating demand in the upcoming year. Also, there has been a relaxation given to the developers on the hefty premiums. This will help them with cost optimisation and avoid project delays and in turn, benefit the customers.
Murali Malayappan, Chairman and MD, Shriram Properties Ltd
The realty sector is expecting the government to accord industry status to the sector as a whole. This is a long-pending demand that would infuse much-needed liquidity by including the sector in the priority lending list of banks and other financial lending institutions. Faster implementation of alternative investment funds (AIF) can also rescue stressed residential projects. Completion of stressed projects will improve homebuyer sentiment and boost demand.
Krish Raveshia, CEO, Azlo Realty
In Budget 2021, we expect measures like continuing with the current low interest and easy liquidity regime. A low-interest rate is a direct stimulus for investment in real estate. We would like the Budget to deliver on measures to boost demand for the industry like enhance the limit of deduction under section 80C of income tax for principal repayment on home loans, a separate exemption for principal repayment on home loans to incentivise investment in real estate. The investment of up to Rs 50,000 in REITs should be allowed as a deduction under Section 80C. Besides, the holding period for REITs to qualify for long-term capital gain should be reduced from 36 months to 12 months, a step which will spur retail investment in a value-creating instrument like REITs.
T Chitty Babu, Chairman and CEO, Akshaya Pvt Ltd
Measures like single window clearance, uniformity in GST for different housing segments, ease of cash flow for better project executions, strengthening the banking infrastructure to aid the developers as well as the homebuyers can go a long way in creating sustained growth. Revision in income tax slabs can spur buyer sentiment which was marred by COVID-19 .
Ashish Deora, CEO and promoter, Aurum Ventures
In Budget 2021, we expect an increase the tax rebate on housing loan interest under Section 24 of the IT Act to Rs 6 lakhs from current Rs 2 lakhs, increase in reduction in Section 80C to Rs 2.5 lakh a year. Both these initiatives will put additional liquidity in the hands of home-buyers which would further boost demand.
Chintan Sheth, Director, Ashwin Sheth Group
We hope the Budget addresses some of the critical issues such as speeding up infrastructure development to improve connectivity to various emerging micro-markets, GST waiver on under-construction projects for under-construction residential development, and ease the cash flow and capital generation options that will support developers to complete constructions on time.
Navin Makhija, Managing Director, The Wadhwa Group
The forthcoming Budget will be crucial in terms of reforms and we believe that the government will take appropriate measures to spur consumer demand. More tax sops and higher relief on home loan rates will woo home buyers and investors to buy property. Additionally, interest rates on housing loans should be reduced to benefit a broader segment of homebuyers, including first-time buyers. The Income Tax benefit for housing should not only be for residential purchasers alone but should also be extended towards commercial purchasers as well. This can help the sector recover from its liquidity woes to a larger extent.
Reeza Sebastian, President – Residential, Embassy Group
The government should consider reintroducing the GST Input Tax Credit (ITC) that will decrease the tax liability of the developer which will allow the latter to reduce the cost of construction and infuse affordability. In the context of consolidation, relaxation on GST for joint development transaction on T.D.R will be a huge benchmark for developers to undertake projects for development. The government should consider increasing tax sops on the purchase of residential units that would help create a ripple effect on the overall economy. Following the Maharashtra model, other states should cut stamp duty to create a win-win the situation for all stakeholders.
Rohit Gupta, CEO, Mantra Properties
In Budget 2021, we wish to see uniform taxation, single-window clearance for schemes and availability of more financing options. Consumer affordability can also be enhanced through increased tax relief measures and lowering interest rates. The GST on construction materials currently impacts the construction costs significantly and affordable homes are not affordable. A rationalised GST bracket with Input credit will help the government work quickly towards Housing For All mission with cost-effective homes.
Uddhav Poddar, MD, Bhumika Group
We expect the government to allow for the availing of Input Tax Credit of GST charged on the construction of the rented property and utilise the same towards the payment of GST on the lease rentals. We also want the government to focus on infrastructure development of tier 2 and 3 cities and make these cities ready for the next round of urbanisation. Accord the long-awaited industry status to the real estate sector as after agriculture, construction is the biggest job generator and employs the largest number of workers. We expect stamp duty to be subsumed into GST to incentivise home buyers and the overall property market sentiments.
Abhishek Jain, Chief Operating Officer, Satellite Developers
The government should consider revising the tax exemption limit for individuals under Section 24 from Rs 2 lakh to Rs 5 lakh as it will help increase the purchasing power of the homebuyers. GST should be re-introduced with an input tax credit on under-construction properties as that will help in bringing down the cost of construction resulting in reduced property prices in the market.
Milind Korde, Founder & MD, Ananta Landwise
The government should consider relaxing individual income tax limits by raising the exemption limits with respect to home loans pertaining to both the interest and principal components. This would enable more disposable income in the hands of homebuyers. Additionally, reducing the GST on raw materials like cement, which are required for construction would also create a tremendous impact on boosting the demand in the housing sector.
Abhishek Bansal, Executive Director, Pacific Group of Malls
The retail segment is looking at measures that could ease out the tax burden on people. Retail activity is one of the crucial aspects of the economy, and the segment would be eagerly waiting to hear about sops that could help it overcome the challenging times of the pandemic.
Ashish Bhutani, MD, Bhutani Group
We expect the government to come out with steps to address the liquidity issue, and fund allocation for infrastructure in the metro peripheral areas. The help would entail measures such as bringing the real estate sector in the banks’ priority list and extending industry status to the whole sector.
Amit Agarwal, Co-Founder and CEO, NoBroker.com
The government has extended the deadline for the PMAY’s Credit Linked Subsidy Scheme (CLSS) for the MIG category till March 2021. This subsidy can be further extended till March 2022, not only because of COVID-19 ’s impact on the economy but also considering that the Economically Weaker Section (EWS) and the Lower- Income Group (LIG) have time till 31 March, 2022, to avail the CLSS subsidy. Apart from this, a tax holiday was provided by the government for affordable housing developers under which 100 percent tax deduction under section 80IBA until March 2021. Both these tax benefits should be extended by another year to boost affordable housing.
Neetish Sarda, Founder, Smartworks
With the pandemic having accelerated the need for flexible office spaces and the co-working market poised for growth with new entrants, there is an expectation of a new/ reduced TDS bracket for service payment to co-working spaces. We hope the Budget would also allocate more funds for IT infra spending. There is a need for an industry status, single window clearance and reinstatement of Input Tax Credit in GST. We look forward to a stimulus to investments in commercial real estate in the upcoming Union Budget, thereby providing a significant fillip to the growth engine, creating jobs, and spur in demand. The government should provide for allowance of capital expenditure incurred by the companies in the co-working segment.
Bhushan Nemlekar, Director, Sumit Woods
The residential segment of the realty space is expected to show signs of improvement if the government can include expansion of the current income tax benefits available for home-buyers, increase the interest deduction to Rs 3 lakhs from the current Rs 2 lakhs, especially for first-time buyers. In order to continue attracting investor interest, the sector would be expecting measures for removing taxation-related inefficiencies.
S Vasudevan, CMD, Ozone Group
We expect a regulatory authority especially for the cement and steel sectors to regulate the price and thereby curb the rise in construction costs and instances of cartelization. The government should adopt a uniform policy across all states in the reduction in stamp duty for various instruments related to real estate transactions for the next 18-24 months. A reduction in premiums for TDR, FSI etc. will enable more cost-effective/cheaper products for all end users. Besides, a reduction in GST across all sectors of realty will bring down the overall property cost and push demand.
Sagar Saxena, Project Head, Spectrum Metro
The sector expects the government to work out policies to solve the liquidity crisis, leading to delays in the completion and implementation of the programme. Model Tenancy Law recently passed by UP Govt. has been a great step to bring in professionalism in the sector. More such prudent measures like granting industry status to the sector will help in bringing commercial and residential realty in the banks’ priority lending list. One of the key demands from this budget will be to help the middle-income group have more buying power by increasing their disposable incomes. The retail segment is looking at changes that could ease out the tax burden on people.
Rahul Singla, Director, Mapsko Group
Conducive measures such as rationalisation of GST in under-construction homes, tax incentives on the purchase of second homes and reduction in stamp duties and registration charges will boost sentiment and push sales. Priority should also be given to infrastructural development that will have a cascading effect on real estate development.
Ravish Kapoor, Managing Director, Elan Group
A futuristic Budget proposing the rationalisation of GST with input credit provision will be a great start to boost commercial real estate. Similarly, the push towards infrastructural development and speedy completion of projects will propel real estate. The granting of the ‘industry’ status to real estate will ensure access to easy credit, ease liquidity, and stimulate the cash inflows into the sector.
Pradeep Misra, CMD, Rudrabhishek Enterprises
The finance minister should grant realty industry status, ease GST regulations, increase tax incentives to buyers, provide easy finance for the sector and single window clearance. Direct measures to address liquidity crisis may include FDI in rental housing, and ECB permissions in all real estate projects. Additionally, it may also make provisions for direct infusion of funds in the sector through existing channels like SWAMIH funds. SWAMIH funds-II should be launched which should be state-centric and wherein state institutions can contribute 50 percent of capital. This should have regional offices in respective states to fund only projects in Tier 2 and 3 cities which are untouched till date, under the current fund.
Ajay Kapoor, CEO, Adhiraj Constructions
In Budget 2021, the government should consider: Rationalisation of GST on property transactions; increasing the income tax exemption limit on principal repayment of home loans; providing tax holidays to the real estate sector to overcome the challenging liquidity conditions, and increase the spending on public transportation infrastructure projects to improve connectivity and reduce congestion.
Anand Shukla, Managing Director, Ocean Infraheights (Golden I)
From a commercial real estate perspective, we are looking forward to reforms and incentives that provide encouragement to the manufacturing, startup sectors, etc.; offer interest or capital subsidies on systems and equipment for all players looking to invest in technology, sustainable building and digitization of operations. We hope that the central and state governments can work together and take a look at reducing GST, stamp duty and circle rates.
Sripad Nandiraj, Founder, Hocomoco
Building construction companies are hopeful that the Budget will provide GST tax incentive on projects that were impacted due to the lockdown. We are also optimistic that the government will provide policies, incentives, or general tax relief to boost public spending on housing and infrastructure. In metropolitan cities like Hyderabad, Mumbai, and others, the real estate/land prices are soaring up to an extent that it has become difficult for a medium earner to buy a house. General tax relief on the total amount of EMI paid will be a great relief to these home buyers.
Prashant Solomon, Managing Director, Chintels India; Treasurer, CREDAI NCR
After a challenging 2020, as we enter 2021, there is a need for some more fiscal measures in the upcoming Budget to accelerate growth in this important sector that generates demand for around 250 other industries. Further extension of the CLSS scheme for the next fiscal year, increase in tax incentives for home buyers, infrastructure status for the entire real estate sector and abolishing the tax on unsold homes are some of the key demand of the industry. States on their part must cut stamp duty on registration of properties, as Maharashtra has done. If the government announces some positive measures on the demand side in the Budget, housing sales will bounce back to reach pre-COVID level.
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