Great ex­pec­ta­tions from the Bud­get

The Gov­ern­ment should en­hance the in­come tax ex­emp­tion limit and give home loan in­cen­tives to help drive de­mand in the res­i­den­tial realty space

HT Estates - - HTESTATES - An­shu­man Mag­a­zine

As we move closer to the Union Bud­get 2015–16, In­dia’s real es­tate sec­tor is hop­ing for key an­nounce­ments to help re­vive the hous­ing mar­ket. With the ex­ist­ing hous­ing short­age in In­dia, de­mand is not re­ally the key is­sue as much as af­ford­abil­ity for the av­er­age cit­i­zen. What the Gov­ern­ment can do to en­cour­age home­buy­ers is an­nounce tax re­bates on hous­ing pur­chases and mort­gages. In­come tax ex­emp­tion lim­its and home loan in­cen­tives would also help to drive de­mand in In­dia’s res­i­den­tial real es­tate.

We are still await­ing the or­di­nance with the lat­est amend­ments to the Land Acquisition Act, 2013, to be fi­nally passed in Par­lia­ment. One hopes that the new Act will be im­ple­mented soon, to­gether with more in­cen­tives for the low cost/af­ford­able hous­ing seg­ment. With the Re­serve Bank of In­dia al­ready hav­ing an­nounced in July 2014 that lend­ing to the af­ford­able hous­ing seg­ment be made el­i­gi­ble un­der the pri­or­ity sec­tor lend­ing cat­e­gory, sim­i­lar an­nounce­ments for other hous­ing seg­ments would also be a wel­come move.

The real es­tate sec­tor ex­pects a push for af­ford­able hous­ing at a mas­sive scale across the coun­try from the up­com­ing Bud­get an­nounce­ments. Among other fac­tors, in­cen­tivis­ing the de­vel­oper com­mu­nity by of­fer­ing sub­sidised land and par­tial own­er­ship of the project, as well as in­cen­tivis­ing the end-user by pro­vid­ing at­trac­tive tax breaks will be de­sir­able.

Ac­cord­ing to the pre­vi­ous Bud­get, low cost af­ford­able hous­ing projects for the ur­ban poor were ex­empted from For­eign Di­rect In­vest­ment (FDI) re­stric­tions, and the Gov­ern­ment had al­lo­cated ₹ 4,000 crore through the Na­tional Hous­ing Board ( NHB) for pro­vid­ing cheaper loans for low cost hous­ing to sup­port the Hous­ing for All by 2022 scheme. Ad­di­tion­ally, ₹ 8,000 crore had been al­lo­cated for the ru­ral hous­ing scheme un­der NHB.

With s ub­stan­tial f unds al­ready al­lo­cated for af­ford­able and/or low-cost mass hous­ing schemes from pre­vi­ous fis­cals left un­used, the ef­fec­tive util­i­sa­tion of fund al­lo­ca­tion for af­ford­able hous­ing can­not be stressed enough.

A re­lax­ation in FDI norms in the hous­ing sec­tor, more­over, in­cluded a re­duc­tion in the min­i­mum cap­i­tal­i­sa­tion from US$10 mil­lion to US$5 mil­lion for wholly-owned sub­sidiaries; and trim­ming the min­i­mum area of con­struc­tion projects from a car­pet area of 50,000 sq Push for the or­di­nance with the lat­est amend­ments to the Land Acquisition Act, 2013. One hopes that the new Act will be im­ple­mented soon, to­gether with more in­cen­tives for the low cost/af­ford­able hous­ing seg­ment With the Re­serve Bank of In­dia al­ready hav­ing an­nounced in July 2014 that lend­ing to the af­ford­able hous­ing seg­ment be made el­i­gi­ble un­der the pri­or­ity sec­tor lend­ing cat­e­gory, sim­i­lar an­nounce­ments for other hous­ing seg­ments would also be a wel­come move The real es­tate in­dus­try ex­pects a push for af­ford­able hous­ing at a mas­sive scale across the coun­try from the up­com­ing Bud­get an­nounce­ments

m to 20,000 sq m. Such re­lax­ation in en­try norms are ex­pected to boost the quan­tum of in­vest­ments go­ing into the hous­ing sec­tor, par­tic­u­larly into our tier II and III cities.

On the per­sonal sav­ings and tax reg­u­la­tions front too, the pre­vi­ous Bud­get had al­lowed for the home loan in­ter­est ex­emp­tion limit to be hiked from ₹ 1.5 lakh to ₹ 2 lakh. Sim­i­lar in­creases from the up­com­ing Bud­get are likely to have an im­pact on home­buy­ers wait­ing to take pur­chase de­ci­sions.

In the up­com­ing Bud­get, how­ever, there must be more clar­ity on the Sar­dar Pa­tel Ur­ban Hous­ing Mis­sion, in terms of fund al­lo­ca­tion, fund­ing in­stru­ments and en­ti­ties, ex­act time­lines and project lo­ca­tions, among other fac­tors. sug­gested three cat­e­gories of cir­cle rates for agri­cul­ture land – the first in­cluded the green belt area, with a changed rate of ₹ 1 crore per acre. The sec­ond cat­e­gory in­cluded ar­eas un­der the land pool­ing zone such as zone J, K-I, K-II, L etc, where the cir­cle rate could be pegged at ₹ 2 to ₹ 3 crore per acre. The third cat­e­gory was mini farm­houses, which are to come up af­ter the fi­nal­i­sa­tion of DDA’s coun­try homes pol­icy, with cir­cle rates of ₹ 5.5 crore. All th­ese three cat­e­gories of de­vel­op­ment are on agri­cul­ture land, but the pro­posal was re­jected.”

Prop­erty ex­perts say that the cir­cle rate on agri­cul­ture land was fixed for the first time in 2008 and has not been re­vised once. “Cir­cle rate of flats, in­di­vid­ual houses and plots were re­vised sev­eral times since 2008 but there has been no rate re­vi­sion for agri­cul­ture land. It is very im­por­tant to find out the rea­son why this has not been done de­spite huge losses in­curred by the state gov­ern­ment. It seems that the gov­ern­ment has kept an av­enue open for politi­cians, busi­ness­men and the rich class to park their black money in land deals,” says Amit Jain, direc­tor, Cen­tre for Re­search and Anal­y­sis of Real Es­tate in In­dia, an NGO work­ing for clean and trans­par­ent real es­tate prac­tices in In­dia.

Pay­ing less stamp duty is not the only rea­son why low prices are de­clared for sale trans­ac­tions. “Of­ten, prop­erty buy­ers do not want to re­veal un­ac­counted-for wealth earned from il­le­gal sources. Low cir­cle rates pro­vide that op­por­tu­nity,” con­cludes Jain.

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