Hous­ing for all by 2022?

Bud­get 2015 should pro­pose a sin­glewin­dow clear­ance and avail­abil­ity of easy fi­nance to en­sure that most In­di­ans have a roof over their heads

HT Estates - - NEWS - Nan­dita Tri­pathi

Home­buy­ers should be given in­cen­tives to boost the de­mand for af­ford­able hous­ing. This can be achieved by in­creas­ing the de­duc­tion limit of in­ter­est on hous­ing loan from the ex­ist­ing 2,00,000 to at least 3,00,000

tax­a­tion un­der Sec­tions 50C and 43CA of the Act cre­ate bot­tle­necks for gen­uine trans­ac­tions where mar­ket value of im­mov­able prop­erty is lower than the stamp duty rate. The pro­vi­sions should be amended to ex­empt gen­uine trans­ac­tions.

De­vel­op­ers fo­cus­ing on the Spe­cial Eco­nomic Zone (‘SEZ’) seg­ment have taken a back­seat post in­tro­duc­tion of DDT and MAT in the Fi­nance Act, 2011. In the re­cent past, some of the de­vel­op­ers have started ex­it­ing the SEZ seg­ment ei­ther by de- no­ti­fy­ing or by share deal. It is crit­i­cal to re-in­tro­duce MAT and DDT ex­emp­tion for SEZ de­vel­op­ers to re­vive the SEZ space.

Ex­pec­ta­tions, es­pe­cially those of the real es­tate sec­tor, are high from the new govern­ment’s first full bud­get. The Prime Min­is­ter’s vi­sion of Hous­ing for All by 2022 has not only cap­tured the in­ter­est of home­buy­ers but of the real es­tate de­vel­op­ers as well.

This project has set a mam­moth task for the NDA-led govern­ment. Re­al­is­ing the dream of hous­ing for all by 2022 will re­quire the govern­ment to lay the foun­da­tion for a strong en­abling frame­work. The project faces sev­eral chal­lenges, in­clud­ing ab­sence of an ef­fec­tive pol­icy frame­work, lack of tax in­cen­tives, sky rock­et­ing real es­tate prices and in­ad­e­quate avail­abil­ity of fi­nances.

The govern­ment needs to ad­dress these key is­sues to give it the much-needed im­pe­tus and en­sure that the vi­sion be­comes a re­al­ity.

Re­quire­ment of mul­ti­ple ap­provals from var­i­ous au­thor­i­ties add to the com­plex­ity and in­crease the over­all de­vel­op­ment cost. Sin­gle-win­dow clear­ance is the need of the hour to fasten the ap­proval process, thereby re­duc­ing the over­all project life­cy­cle and curb­ing the as­so­ci­ated costs.

An­other as­pect that needs at­ten­tion is the avail­abil­ity of easy, long-term fi­nance to the sec­tor. Lack of ad­e­quate fi­nance can con­trib­ute to un­war­ranted de­lays and in­crease in cost of the project. Grant­ing in­fra­struc­ture sta­tus to hous­ing and real es­tate de­vel­op­ment would help tackle this is­sue. It would pro­vide the sec­tor ac­cess to long-term af­ford­able fund­ing as well help it ben­e­fit from other in­cen­tives as­so­ci­ated with the sta­tus.

Mul­ti­plic­ity of fees and taxes ap­pli­ca­ble to the sec­tor is an­other damp­ener. As per a KPMG re­port, De­cod­ing Hous­ing for All by 2022, var­i­ous taxes and levies on the sec­tor go on to in­crease the hous­ing cost by al­most 30% to 35%. Clar­ity on in­clu­sion of real es­tate un­der the am­bit of goods and ser­vice tax (GST) regime would help in ra­tio­nal­i­sa­tion of these taxes.

The cur­rent in­di­rect tax regime also needs to be re­aligned to make hous­ing for all a con­ducive propo­si­tion. Ap­pli­ca­bil­ity of ser­vice tax on trans­fer of de­vel­op­ment rights is a con­tro­ver­sial is­sue and clar­ity on it is re­quired. Long-term leas­ing of land at­tracts ser­vice tax as well as stamp duty, thus sub­ject­ing the trans­ac­tion to mul­ti­ple taxes.

Avail­abil­ity of credit un­der ser­vice tax laws to the con­struc­tion sec­tor also needs to be re­vamped. Ad­dress­ing these is­sues could ac­cel­er­ate this ini­tia­tive.

Also, there is an ur­gent need to pro­vide tax in­cen­tives to the de­vel­op­ers and ex­tend the same to home­buy­ers. Re-in­tro­duc­tion of tax ben­e­fits un­der Sec­tion 80-IB of the In­come Tax Act 1961 (the Act) for af­ford­able hous­ing could play a ma­jor role in en­cour­ag­ing low cost hous­ing.

It would help in at­tract­ing pri­vate de­vel­op­ers to con­trib­ute to­wards smaller hous­ing units where de­mand ex­ceeds sup­ply.

At the same time home­buy­ers would also need to be in­cen­tivised to boost the de­mand for af­ford­able hous­ing. This can be achieved firstly by the govern­ment pro­vid­ing re­bates in per­sonal taxes to in­crease dis­pos­able in­come in their hands and by in­creas­ing the de­duc­tion limit of in­ter­est on hous­ing loan from the ex­ist­ing ₹ 2,00,000 to atleast ₹ 3,00,000. Avail­abil­ity of low cost credit with in­ter­est sub­ven­tion could make own­ing a home more af­ford­able and at­tain­able.

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