PMAY, GST top bud­get 2017 wish list

In­crease in tax de­duc­tion limit for hous­ing loans for metro ci­ties de­manded for mar­ket re­vival

Hindustan Times (Chandigarh) - Estates - - HT ESTATES - HT Es­tates Cor­re­spon­dent ■ ht­es­tates@hin­dus­tan­times.com

With Bud­get 2017 barely a few weeks away, play­ers in the real es­tate sec­tor have pro­posed a wish list ask­ing for more clar­ity on ben­e­fi­cia­ries who will avail hous­ing loans with in­ter­est sub­si­dies un­der Prad­han Mantri Awas Yo­jana (PMAY). They also want an in­crease in the tax de­duc­tion limit for hous­ing loans, es­pe­cially for metropoli­tan ci­ties. The cur­rent limit of

` 2 lakh is in­signif­i­cant given the ticket sizes in ci­ties, they say.

More clar­ity has also been sought in the GST (goods and ser­vices tax) struc­ture an­nounced last year. “The real es­tate in­dus­try is wait­ing with bated breath to see which tax rate is ap­plied to the real es­tate and con­struc­tion in­dus­try. Also, the ben­e­fits of de­mon­eti­sa­tion ex­er­cise should be passed on to the com­mon man through eas­ing of tax slabs and of­fer­ing a higher de­gree of re­bate,” says Anuj Puri, chair­man and coun- try head, JLL In­dia.

The govern­ment re­cently an­nounced that in­ter­est rates of 3% would be ap­pli­ca­ble on loans of up to ` 12 lakh and 4% on loans of up to ` 9 lakh, un­der PMAY. Now that two new in­come cat­e­gories can avail higher loans with in­ter­est sub­si­dies, more clar­ity is re­quired on the ac­tual def­i­ni­tion of ben­e­fi­cia­ries who can avail of these ben­e­fits. For ex­am­ple - would young ur­ban pro­fes­sion­als hop­ing to buy their own apart­ments but not be­long­ing to ei­ther the EWS (Eco­nom­i­cally Weaker Sec­tion) or the LIG (Low In­come Group) seg­ments be al­lowed sim­i­lar sub­ven­tions? Also, af­ford­able hous­ing is largely avail­able in the fringe ar­eas of met­ros and tier-II and III ci­ties. Would cer­tain re­de­vel­op­ment projects within the metropoli­tan city lim­its – and meet­ing the af­ford­able hous­ing def­i­ni­tion – be granted sim­i­lar ben­e­fits?

First-time home­buy­ers were given an ad­di­tional ` 50,000 tax ex­emp­tion in the last Bud­get for pur­chas­ing prop­erty of up to

` 50 lakh with a loan of up to ` 35 lakh. This an­nounce­ment mostly ben­e­fited end-users in tier-II, III ci­ties but not as many in the big­ger met­ros where hous­ing is largely above this spe­cific limit. Can the up­com­ing Bud­get bring in sim­i­lar tax ex­emp­tions for first-timers in the met­ros too? A higher limit spe­cific only to the big­ger met­ros can be in­tro­duced. Also, can mid­dle class youth buy­ing their first house in an af­ford­able project get ad­di­tional in­come tax in­cen­tives for at least five years? Given the lack of in­sti­tu­tion­alised rental hous­ing in In­dian ci­ties, such a move could spur many fence sit­ters into mov­ing out from their rented apart­ments into owned houses. It could also make de­vel­op­ers come up with prod­ucts suit­ing this seg­ment, Puri says.

In the pre­vi­ous Bud­get, no fi­nan­cial pro­tec­tion was of­fered to end-users against project de­lays. This Bud­get can ex­tend tax re­bates in cases where projects get de­layed due to bona fide rea­sons. All these ef­forts can help the govern­ment move closer to its dream of Hous­ing for All by 2022.

He also feels the govern­ment should in­crease the tax de­duc­tion limit for hous­ing loans, es­pe­cially for buy­ers in metropoli­tan ci­ties. The cur­rent limit of ` 2 lakh is in­signif­i­cant given the ticket sizes in ci­ties, es­pe­cially in big­ger met­ros like Mum­bai, where an over­whelm­ing ma­jor­ity of the avail­able hous­ing is priced at, or above, ` 1 crore.

The tax ex­emp­tion limit should be auto-set to match in­fla­tion­ary trends in a fi­nan­cial year. Also, tax con­ces­sions on house in­surance pre­mi­ums could be in­tro­duced to en­cour­age end users to in­sure their homes, says Puri.

While the GST (goods and ser­vices tax) struc­ture was an­nounced last year, the real es­tate in­dus­try is wait­ing with bated breath to see which tax rate is ap­plied to the real es­tate and con­struc­tion in­dus­try. What would hap­pen to the abate­ment scheme al­lowed un­der the ser­vice tax regime? Cur­rently, de­vel­op­ers and home buy­ers can ob­tain ser­vice tax ben­e­fits un­der the abate­ment scheme.

ISTOCK

The re­alty sec­tor has yet to get clar­ity on the GST struc­ture.

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