BUDGET 2018 MUST DELIVER!

Considering that Budget 2018 would be the last full budget before the Modi government faces re-election in May 2019, stakeholders want the government to extend more incentives to the sector to achieve PM Modi’s dream of ‘Housing for all by 2022 ’

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Union Budget 2018 will be very crucial, especially for real estate sector, as it would be the last full budget before the Modi government faces re-election in May 2019.

The Modi government introduced a series of reforms, with Real Estate Regulation Act (establishing a regulator, RERA, in each state and UT) and Goods and Services Tax (GST) focused on reviving the real estate sector in particular and the economy in general.

These two measures have brought in transparency and opened up the sector as a secure investment asset class for institutions and individuals alike.

At the same time, the government defined the affordable housing segment clearly to give benefit to the sector. Subsidy under Prime Minister Awas Yojana (PMAY) and tax benefit to developers in construction of affordable housing under Section 80IBA have revived the affordable segment of the sector.

But the sector is still languishing and requires a push at the policy level, a number of consultants like JLL India, ICRA, Grant Thornton, RICS, Naredco (National Real Estate Development Council), and developers have said.

All these reforms in last couple of years have given a solid platform for the real estate sector to perform and contribute to the GDP in a significant manner, but further tweaks in existing laws and additional incentives can give the necessary fillip to the sector to grow faster, NeerajSharma, director of Grant Thornton, said.

The expectation from the forthcoming Union Budget is multifold: Increase the demand and supply, so that the country can realize PM Modi’s dream programme of “Housing for all by 2022”.

Provide additional money in the hands of tax payers, the customers, and make the processes in real estate more seamless and quicker.

Make the real estate attractive for both kinds of customers – those who aspire to buy their first house and those who view it as an attractive investment class.

BUDGET 2018 MUST DELIVER!

As shown in the chart on page1, consultants say that the government should use the sector not only to revive the economy, but also to incentivize individual investments in creating wealth.

ICRA said that expansion of the income tax deductions available to homebuyers can be used to incentivize them, especially the first-time buyers.

MrinalKumar, partner in Shardul Amarchand Mangaldas, said they expect the government to enhance the deduction against the interest paid on home loan taken to buy a house, from the existing cap of Rs 2,00,000 per annum, in Budget 2018.

They also say that the deduction against the interest paid on the home loan taken to invest in the housing sector should be allowed on the actual basis; especially in a market where return on capital from rentals of a residential property is around 2%, tax incentive must be given to promote investment in the sector.

With the floating, young working population on the rise, the requirement for rental housing would increase in the times to come.

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