NEW DELHI: Indian real estate industry, which is reeling under the pressure of liquidity crisis and slump in home buyer’s confidence, is expecting the union budget 2019, to be presented on 5th July, to give much required impetus to the slow-moving sector.
Few of the major expectations of the industry are:
- No cap for loss from house property: The limit set-off for loss from house property of 2 lakh should be removed at least for rented houses
- Reinstating Input Tax Credit (ITC) and extending it to the commercial segment against GST payable on rent of same project or any other building rent.
- Further extension should be given for availing benefits falling under Sector 8O-IBA for affordable housing scheme/ housing for all
- Abolition of GST payable by the landowner in a joint development agreement
- Abolition of tax on the unsold inventory
- Framing a National Rental Housing Policy in order to meet the target of Housing for all
Here is what industry experts expect from Budget 2019:
Ashish R. Puravankara, managing director, Puravankara
Redressing the liquidity crunch in the sector by pumping in more capital, which will also provide an impetus to the country’s economic growth. Differential GST rate for apartment value for more than Rs 7,000 per sq ft.
Anshuman Magazine, Chairman & CEO, India, South East Asia, Middle East & Africa, CBRE
The sector is expecting the government to further ease External Commercial Borrowings (ECB) norms, so as to ensure steady in-flow of capital from foreign investors. Similarly, introduction of housing bonds, granting special status to HFCs at par with the banking sector, will further help in providing the much-needed fillip to the housing segment across all markets and geographies.
Shubham Jain, senior vice president & group head, Corporate Ratings, ICRA
Measures taken to ease the availability of capital for the NBFCs will have a positive impact on the real estate sector, which is dependent on financing from the NBFCs to a large extent.
Manas Mehrotra, chairman, 315 Work Avenue
The companies are expecting that the government would enable co-working firms to claim input credits on work contract and construction services supplied, as detailed under GST provisions. This would check the increased outflow of cash that co-working firms are currently experiencing. The firms are hoping that input tax credit under GST be extended to developers so that it is passed on to companies who lease out space and thereby reduce their overall costs. This would significantly aid faster growth of co-working business in the country.
Abhishek Goenka, CEO & CFO, CoWrks
Corporate tax rates in India continue to be high, and rather than having a system of different companies paying different rates, a uniform 25% rate to begin with is overdue.
Shishir Baijal, chairman & managing director, Knight Frank India
At present, Section 80 C of the Income Tax Act does not provide for a focussed benefit on housing.Tax payers have numerous investment alternatives to choose from and the lack of tax benefit on the principal amount of home loans makes them put their home purchase decisions on hold, thus impacting sales. A separate annual deduction of INR 150,000 for principal repayment will provide the much needed fillip to opt for home loans and inadvertently push real estate sales.
Puneet Chandra, founder & joint managing director, Skootr
Setting up a regulatory body for co-working/serviced office companies for putting across industry demands and early disputes resolving; encouraging commercial real estate operators by opening up government sector projects for management and daily operations as an outsourced function leading to better focus on core business activities and specialization.
Daizy Chawla, senior partner, Singh & Associates
From the main budget for 2019-2020, it is expected that now its almost two and half year has passed since Insolvency and Bankruptcy came into force and many amendments have been depending upon the requirement. However, still, the object for which it was enforced is still not been achieved. We hope that the decision wrt home buyers to be continued as the financial creditor will be decided since at present many real estate companies are under the threat of IBC due to the application of single home buyer. The tool of IBC is been used by some as an arm twisting technique which also required to be taken care. Many changes recently proposed by IBBI can be considered to be included vide budget like last chance to promoters before the corporate debtor actually goes to liquidation due to non-availability of resolution plan, cross border insolvency, etc.
Niranjan Hiranandani, president, NAREDCO
Expectations from industry stakeholders revolve priority around redressing liquidity crunch- an oil of India’s growth engine. The choking of liquidity is taking a toll on the health of companies and further inflicting financial damage. Quick corrective steps should be undertaken by apex bodies and government to pump in enough liquidity in the system to bring economic growth on track. Further, expectation lies ahead in rationalization of taxes by subsuming stamp duty in the GST, extending Input Tax Credit to the commercial segment, reducing corporate tax, abolishing of MAT to provide thrust to SEZ developments. Another most imperative expectation is to frame National Rental Housing Policy in order to meet the target of Housing for all by. In addition, we expect improvisation in Ease of doing Business in order to grant quick approvals under one roof and avoid any further delay and discrepancies.
Deo Shankar Tripathi, managing director & CEO, Aadhar Housing Finance
The foremost priority should be to address the liquidity scenario of the HFCs and NBFCs, particularly the smaller NBFCs and HFCs who are largely dependent on the banking system. Insolvency issues and liquidity should not intermix and be dealt separately and liquidity is the top priority to give boost to affordable housing. Let whatever regulatory controls like Asset liability Management, Leverage, Risk Management etc, the RBI wants to bring in to enforce governance and systemic issues, be implemented, but till then liquidity should made available to NBFCs and HFCs. Already precious 9 months are wasted. Banks should be advised to provide funding to all well functional HFCs and NBFCs with investment ratings, at reasonable rates, as they were doing prior to September 2018. Existing crises of confidence is to be settled by Government and RBI’s assurance. This is of utmost importance for the growth of the economy, GDP, employment, housing, real estate, SMEs and various other sectors.