The government will present the interim Budget 2019 on February 1. This will be the last budget before the general election due by May this year. From industry experts to common public, all eyes will remain on Budget announcements for any signs of changes in policy for the coming period. For the real estate sector, experts think that a much-needed impetus is required from the Union Budget 2019. Earlier, industry body Ficci had said that the government should increase the income tax deduction limit for individuals on interest payment against loans taken for acquisition or construction of self-occupied property.
Here’s what other real estate experts say on their expectations from the upcoming Budget.
Shishir Baijal, chairman and managing director, Knight Frank India
“It is time that real estate gets industry status. This will enable developers to raise funds at lower rates and reduce their cost of capital which would eventually have a bearing on overall project cost. The move would provide a fillip to the stress-stricken sector amid the reforms-driven new order.”
“Presently real estate falls under the 18 per cent tax bracket of the Goods and Services Tax (GST) Act with 1/3rd abatement for land taking the effective tax rate to 12 per cent. However, in major metros, the share of land is more than 50 per cent of the project cost. We therefore recommend that the government aligns this with market realities and accordingly increase the abatement for land to 50 per cent thereby bringing down the effective tax rate to 9 per cent.”
“At present, Section 80 C of the Income Tax Act does not give a singular focus on housing because of numerous competing investment alternatives. To augment the house purchase decision and provide some fillip to real estate sales, it is suggested to carve out a separate annual deduction of Rs. 1,50,000 for the principal repayment.”
“Despite the regulatory approval being in place for quite some time, Real Estate Investment Trust (REIT), a potent instrument of change in the real estate industry, has been held back. For unit holders, the long-term capital gains holding period for REIT units should be brought down from 3 years to 1 year (at par with equity investments). This shall make REITs more attractive for the investors.”
Ankur Dhawan, chief investment officer, PropTiger
“Though typically governments do not change tax structure in interim budget, but this time due to improvement in direct tax collection government can provide some relaxation to middle class.”
“Real estate industry will be expecting increase in tax benefits on home loan interest from 2 lakh to 3 lakh as well as modification in tax slabs to incentivise home buying.”