Bud­get’s Wel­come Boost for Real Estate

The Economic Times - - The Edit Page -

It is wel­come that the Bud­get pro­poses sev­eral mea­sures to ra­tio­nalise tax and boost trans­parency in the pol­icy-chal­lenged real estate sec­tor. Abroad, in the ma­ture markets, real estate ac­counts for al­most half the GDP growth; the like fig­ure for real estate ac­tiv­ity here is far smaller. Clearly, there is much po­ten­tial for growth in the sec­tor — of course, con­tin­gent on over­all growth and dy­namism in the econ­omy as a whole. The Bud­get seeks to shift the in­dex­a­tion base year from 1981 to 2001 for the levy of capital gains tax on land and real estate, which was long over­due. An un­re­vised in­dex­a­tion base year is per­verse in­cen­tive to hide and not fully dis­close capital gains in hous­ing and real estate. Ad­di­tion­ally, in­fras­truc­ture sta­tus for af­ford­able hous­ing and its broader cat­e­gori­sa­tion are both moves in the right di­rec­tion of re­form. Fur­ther, re­moval of the tax on no­tional rental in­come for one year, from the date of is­sue of com­ple­tion cer­tifi­cate, would al­low real estate de­vel­op­ers to liq­ui­date in­ven­tory and avoid ad­di­tional tax bur­den. There are still other no­table hous­ing-re­lated mea­sures in the Bud­get, such as the in­creased quan­tum of re­fi­nance for real estate, or the move to ex­tend the pe­riod for ex­ter­nal com­mer­cial bor­row­ings for hous­ing at re­duced rates. Yet, there re­mains wide­spread opac­ity in real estate, and which needs to go. Re­port­edly, con­struc­tion per­mits re­quire sev­eral dozen clear­ances. We surely need to move to a sys­tem of on­line is­suance of such per­mits, across states. The base-year in­dex­a­tion needs decadal change, for pre­dictabil­ity and trans­parency. The way ahead is to frame con­crete rules un­der the Real Estate Act, 2016, and also re­vamp reg­u­la­tory over­sight across ju­ris­dic­tions. We do need to sys­tem­at­i­cally shore up re­source al­lo­ca­tion for hous­ing and real estate na­tion­ally.

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