De­cod­ing Union Bud­get 2017-18 Impact on Real Es­tate

FICCI Business Digest - - News -

FICCI or­ga­nized an in­ter­ac­tive ses­sion on 'De­cod­ing Union Bud­get 2017-18 - Impact on Real Es­tate' on Fe­bru­ary 9, 2017 in New Delhi jointly with PwC, the tech­ni­cal knowl­edge part­ner for this in­ter­ac­tive ses­sion. The pur­pose of the in­ter­ac­tive ses­sion was to dis­cuss the impact of Union Bud­get (2017-18) on real es­tate sec­tor with a fo­cus on un­der­stand­ing view­points from each stake­holder in­clud­ing de­vel­oper, banks, law firms, pri­vate eq­uity, con­sul­tants and IPCs.

Ra­jiv Ran­jan Mishra, Joint Sec­re­tary, Min­istry of Hous­ing and Ur­ban Poverty Alle­vi­a­tion, Gov­ern­ment of India, de­liv­ered the key­note ad­dress and chaired the panel dis­cus­sion on 'Union Bud­get: Impact Analysis on Real Es­tate'. He brought to light some in­ter­est­ing facts about the fu­ture of In­dian real es­tate sec­tor and said that the gov­ern­ment was draft­ing a Na­tional Ur­ban and Habi­tat Pol­icy, Na­tional Rental Hous­ing Pol­icy and Model Ten­ancy Act for ef­fi­cient func­tion­ing of the real es­tate sec­tor and im­part­ing trans­parency in its work­ing.

Mishra said that bud­get was crit­i­cal to the real es­tate sec­tor as it ad­dressed many of the in­dus­try's is­sues by way of pol­icy and leg­isla­tive in­ter­ven­tions. He said that the gov­ern­ment has ex­tended the ben­e­fits of af­ford­able hous­ing schemes to mid­dle in­come groups as well and was now en­cour­ag­ing de­vel­op­ers to en­ter the af­ford­able hous­ing seg­ment by way of grant­ing in­fra­struc­ture sta­tus to it.

Dr. A. Di­dar Singh, Sec­re­tary Gen­eral, FICCI, said that the gov­ern­ment has taken many con­struc­tive steps to­wards mak­ing the sys­tem trans­par­ent and eas­ier to com­ply with which has re­sulted in ef­fi­cient gov­er­nance. The bud­get has im­pli­ca­tions on var­i­ous sec­tors and it was an­other step to­wards the re­forms agenda of the gov­ern­ment. He as­sured that FICCI would con­tinue to sup­port the ini­tia­tives of the gov­ern­ment.

The fol­low­ing are the ma­jor con­cerns raised by the in­dus­try dur­ing the in­ter­ac­tive ses­sion: 1. An­nounce­ment of af­ford­able hous­ing as in­fra­struc­ture sta­tus is a wel­come move, how­ever in­dus­try seeks, 'in­dus­try sta­tus' for the en­tire real es­tate sec­tor, which will help to achieve quicker & eas­ier fi­nanc­ing for real es­tate projects and give de­vel­op­ers an al­ter­nate source of fund­ing. 2. Is­sue re­gard­ing un­sold in­ven­tory is a ma­jor con­cern faced by the in­dus­try, as real es­tate de­vel­oper the en­tire cash-flow of the project stuck and de­vel­oper is un­able to com­plete its projects, there­fore the Gov­ern­ment needs to cre­ate an es­crow mech­a­nism for the same like sep­a­rate small fund to re­solve the prob­lem. 3. Is­sues un­der Right to Fair Com­pen­sa­tion and Trans­parency in Land Ac­qui­si­tion, Re­ha­bil­i­ta­tion and Re­set­tle­ment Act, 2013 (LARR): a. Local self-gov­ern­ments should be recog­nised as "ap­pro­pri­ate gov­ern­ments" in mat­ters of land ac­qui­si­tion. b. The com­pen­sa­tion for the ac­quired land is based on the value of the agri­cul­tural land; how­ever price in­creases have been ig­nored, which should be taken into con­sid­er­a­tion. 4. In the cur­rent union bud­get an­nounce­ment, for af­ford­able hous­ing, in­stead of built up area of 30 and 60 square me­tre, the car­pet area of 30 and 60 square me­tre will be counted. Also the 30 square me­tre limit will ap­ply only in case of mu­nic­i­pal lim­its of 4 metropoli­tan ci­ties while for the rest of the coun­try in­clud­ing in the pe­riph­eral ar­eas of met­ros, limit of 60 square me­tre will ap­ply, but a fine print is re­quired for the same where it clar­i­fies as­pects like; im­pli­ca­tions of the rule when a prop­erty is fall­ing in both metro & non-metro area. 5. In­ter­est sub­ven­tion for hous­ing loans over ` 50 lakhs and above should be given; which will boost the mid-hous­ing seg­ment pop­u­la­tion liv­ing in the metro ci­ties of India. 6. Fur­ther re­lax­ation is re­quired in Sec­tion 194-IA - TDS on trans­fer of im­mov­able prop­er­ties (other than agri­cul­tural land) 7. The union bud­get in­di­cates the tax ar­bi­trage avail­able to in­di­vid­u­als via set­ting off loss from sec­ond home has now been lim­ited to ` 2 lakh. The pro­vi­sion may dis­cour­age in­vest­ment in sec­ond prop­erty to save tax. It is in­deed laud­able that sec­ond-time home buy­ers have been

L to R: Dr. A. Di­dar Singh, Sec­re­tary Gen­eral, FICCI; Navin M. Ra­heja, Chair­man, FICCI Real Es­tate Com­mit­tee and Chair­man & Man­ag­ing Di­rec­tor, Ra­heja De­vel­op­ers Ltd.; Ashutosh Chaturvedi, Part­ner, Tax and Reg­u­la­tory, PwC India; Mousumi Roy, Se­nior...

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