Wha­tre­alty needs from Union bud­get 2018­19?

WAY FOR­WARD The gov­ern­ment has done a lot for the realty sec­tor

HT Estates - - FRONT PAGE - Anuj Puri ht­es­tates@hin­dus­tan­times.com The au­thor is Chair­man, ANAROCK Prop­erty Con­sul­tants

Ev­ery year, the Union Bud­get pre­sents­theGovern­men­twithan op­por­tu­nity to tweak the di­rec­tion that the In­dian econ­omy is tak­ing. Some­times, hard de­ci­sions are tak­en­which, whilenec­es­sary, do not nec­es­sar­ily go down­well­with­MrEvery­man. At other times, the Union Bud­get is clearly meant to be a crowd­pleaser. This­in­vari­ably hap­pens whenan­in­cum­ben­tGovern­ment is fin­ish­ing its term and gen­eral elec­tions loom, for ob­vi­ous rea­sons.

The cur­rent Gov­ern­ment has done a lot for the In­dian real es­tate in­dus­try, even­when­it­was in the form of hard de­ci­sions like de­mon­e­ti­za­tion and the dis­rup­tive but very nec­es­sary RERA. With the hard de­ci­sions now taken, the In­dian real es­tate sec­tor fer­vently hopesthatit is at the re­ceiv­ing end­ofthe benev­o­lence im­plied in a pop­ulist bud­get.

De­spite the Gov­ern­ment’s very proac­tive stance to­wards clean­ing up and reg­u­lat­ing the sec­tor, there arestill sev­eral pol­icy-re­lated pain points where the com­ingUnionBud­get­can­makea de­ci­sive dif­fer­ence:

Sin­gle­win­dow clear­ance

Why this has not hap­pened de­spite it be­ing a very clear and dire need- even­more­so­given­the Gov­ern­ment’sdreamofHous­ing for All by 2022 - is a bit of a mys­tery. The­clear­ance­an­dap­proval pro­cess­for res­i­den­tial real es­tate projects has­beenan­im­ped­i­ment for a long time. Although many ini­tia­tives have­been­tak­en­tocre­ate a con­ducive busi­ness envi- ron­ment in the sec­tor, the de­mand­fors­in­gle win­dow­clear­ance­mech­a­nis­minto­tal­i­tyis yet to be ful­filled. If im­ple­mented, sin­gle-win­dow­clear­ance­can­signif­i­cantly re­ducetheover­all­pro­jects cy­cle time and de­vel­op­ers will be able to fo­cus on their core busi­ness of project ex­e­cu­tion. Post-RERA, it has­be­comeallthe more im­por­tant to fa­cil­i­tate smooth­clear­ance­san­dap­provals so that there are no ex­e­cu­tion de­lays due to pro­ce­dural hin­drances.

In­dus­try sta­tus to realty sec­tor

Again, a long-stand­ing de­mand which­has­so­far­gone­un­met. Real es­tate is one of the key GDP con­trib­u­tors and the fourth-largest em­ploy­ment gen­er­a­tor in In­dia. Ex­tend­ing in­dus­try sta­tus to the en­tire real es­tate sec­tor will help de­vel­op­er­storaise­fund­sat­lower rates and, in turn, re­duce their project costs - which will help in push­ing de­mand.

Ad­di­tion­ally, the in­clu­sive growth of the real es­tate sec­tor will help in gen­er­at­ing em­ploy­ment across var­i­ous sec­tors which are di­rectly or in­di­rectly re­lated to it.

Tax ra­tio­nal­iza­tion on REITs

Asoft­o­day, the­first REITisyetto belisted in In­dia. Sim­pli­fy­ing the tax­a­tion­norms­forREIT­sisa­c­rit­i­cal re­quire­ment for list­ings to start flow­ing in, which­will ben­e­fit the en­tire real es­tate sec­tor by the en­hanced par­tic­i­pa­tion of a much broader band­width of in­vestors.

Higher in­come tax benefits for first­time home buy­ers

As of now, un­der-con­struc­tion prop­er­ties are levied a GST of 12%, whichissig­nif­i­cant­ly­higher thanthep­re­vi­ous­taxes. TheGovern­ment should strive to make GSTatax-neu­tral propo­si­tion so as to help in re­viv­ing de­mand in the real es­tate sec­tor. Clar­ity and trans­parency on­in­put­tax credit will also help in rationalizing the taxes.

GREATER CLAR­ITY AND TRANS­PARENCY IN IN­PUT TAX CREDIT IN THE SEC­TOR WILL ALSO HELP IN RATIONALIZING THE TAXES

In­cen­tives for green build­ings

The­yaretheindis­putable­needof the hour in In­dia’s de­te­ri­o­rat­ing ur­ba­nen­vi­ron­ment, but­the­marginally higher cost of con­struc­tion of green build­ings haskepta ma­jor­i­ty­ofde­vel­op­er­s­awayfrom such projects. Keep­ing the cur­rent and cer­tain fu­ture chal­lenges to the en­vi­ron­ment, the Govern­mentshoulden­cour­agede­vel­op­ers with higher in­cen­tives in terms of FSI and/or somede­gree of tax ex­emp­tion to en­cour­age them to adopt green build­ing tech­nolo­gies.

MINT/PHOTO

The clear­ance and ap­proval process for res­i­den­tial projects has been marred by ob­sta­cles

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