Govt to Give Tax Ben­e­fit to First-time Home Buy­ers

Scheme ex­pected to be no­ti­fied shortly and will be ef­fec­tive from Jan 1 ’17

The Economic Times - - Companies: Pursuit Of Profit - Our Bureau

New Delhi: The gov­ern­ment will give a ben­e­fit of .₹ 2.4 lakh to first-time home buy­ers with tax­able in­come be­low .₹ 18 lakh a year, which would be a game changer for the sec­tor, Hous­ing and Ur­ban Poverty Al­le­vi­a­tion Sec­re­tary Nan­dita Chat­ter­jee said.

The amount is equiv­a­lent to the to­tal in­ter­est sub­sidy over a 20-year loan and will be given up­front to the hous­ing fi­nanc­ing com­pany, through nodal agen­cies such as Na­tional Hous­ing Bank and Hudco to re­duce the out­stand­ing loan. For a15-year loan, the value of the ben­e­fit would be .₹ 2.2 lakh.

The sec­re­tary said the scheme is ex­pected to be no­ti­fied shortly and will be ef­fec­tive from Jan­uary1, 2017. “This is the first time we are talk­ing about the mid­dle-in­come group. We were hop­ing that this scheme would be a game changer,” Chat­ter­jee told a gath­er­ing of real es­tate de­vel­op­ers and hous­ing fi­nance ex­ec­u­tives at the ET Round­table on Hous­ing for All.

In­dus­try ex­ec­u­tives agreed. PNB Hous­ing man­ag­ing di­rec­tor San­jaya Gupta said this would make projects af­ford­able as EMI fall. Amit Bha­gat, CEO of ASK Prop­erty In­vest­ment Ad­vi­sors said: “The move will in­crease the af­ford­abil­ity and el­i­gi­bil­ity of more than 90% home buy­ers as tax­able in­come of .₹ 18 lakh is sig­nif­i­cantly on the higher side.” The Prad­han Mantri Awas Yo­jana anno- —Photo: Am­ren­dra Jha

unced by PM Naren­dra Modi on De­cem­ber 31 gives home­buy­ers sub­sidy at dif­fer­ent rates de­pend­ing on their in­come.

For an­nual in­come be­low .₹ 6 lakh, the sub­sidy is 6.5 per­cent­age points on a prin­ci­pal com­po­nent of .₹ 6 lakh, re­gard­less of their to­tal loan. For in­come up to .₹ 12 lakh, the sub­sidy is 4 per­cent­age points on a prin­ci­pal com­po­nent of .₹ 9 lakh, and the high­est in­come cat­e­gory, up to .₹ 18 lakh, its 3 per­cent­age points on a prin­ci­pal com­po­nent of .₹ 12 lakh.

“For the last two years, the gov­ern­ment has been try­ing to make an en­vi­ron­ment where af­ford­able hous­ing can be pushed ahead. Af­ford­able hous­ing has be­come an im­por­tant sec­tor,” Chat­ter­jee said.

In­dus­try lead­ers said in­fra­struc­ture sta­tus for af­ford­able hous­ing would en­sure easy ac­cess to cap­i­tal for such projects. “The in­fra­struc­ture sta­tus makes life eas­ier for us. The in­ter­est rate sub­ven­tion will kick-start the de­mand,” said Manoj Gaur, MD of Gaur­sons. Ge­tam­bar Anand, chair­man of ATS In­fra­struc­ture, said there was a lot of am­bi­gu­ity in defin­ing af­ford­able hous­ing and said a uni­form def­i­ni­tion was needed. HDFC’s San­jay Joshi said home loans should also cover stamp du­ties which are 10% of the cost. “It will make it very easy for home­buy­ers to ac­quire proper- ty since there will have easy ac­cess to funds,” he said.

SD Gupta of In­ter­na­tional Fi­nance Corp said hous­ing fi­nance firms needed more long-term funds from banks to meet the huge re­quire­ment of af­ford­able hous­ing.

De­vel­op­ers such as Stel­lar Group’s Ak­shay Sethi said the gov­ern­ment must de­fine ‘car­pet area’ that qual­i­fies for af­ford­able hous­ing in var­i­ous met­ros. Eldeco MD Pankaj Ba­jaj echoed the view and added: “De­vel­op­ers should not be forced to use 90% of the Floor Area Ra­tio (FAR) if he is will­ing to give it up.” Emaar Group CEO San­jay Mal­ho­tra sought har­mon­is­ing of cen­tre’s and states’ reg­u­la­tions. “There ex­ists a lot of di­chotomy be­tween the Cen­tre’s di­rec­tions and the way states act. De­vel­op­men­tal re­stric­tions like size of the hous­ing project in a lot of states cre­ate anom­aly,” he said.

Shrikant Paran­jape, chair­man of Paran­jape Schemes (Con­struc­tion), said the gov­ern­ment should help re­duce con­struc­tion costs and sug­gested SEZ­like struc­tures for af­ford­able hous­ing. “When it comes to real es­tate de­vel­op­ers, cost of land is in­signif­i­cant for af­ford­able hous­ing. We want to re­duce the cost of con­struc­tion,” he said. Ma­hen­dra Singhi, group CEO — ce­ment, Dalmia Bharat Ce­ment, and San­jay Ku­mar Gupta, chief mar­ket­ing of­fi­cer of Am­buja Ce­ments, pro­posed the Mex­i­can model of set­ting up an SPV with pri­vate play­ers, states, de­vel­op­ers and other stake­hold­ers for af­ford­able hous­ing.

Sit­ting from left: San­jay Joshi, Pankaj Ba­jaj, Ma­hen­dra Singhi, Nan­dita Chat­ter­jee, Ge­tam­bar Anand and Shrikant Paran­jape; Stand­ing from left : San­jay Mal­ho­tra, Ak­shay Sethi, SD Gupta, Gourav Bhutani, SK Gupta, Amit Bha­gat, San­jaya Gupta and Manoj Gaur, at The Eco­nomic Times In­dia In­fra Sum­mit 2017

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