The government should reduce GST rate on under-construction properties, implement single-window clearance for real estate projects and give industry status to the entire sector, property consultant ANAROCK said in its budget wishlist to boost demand.
It also demanded higher tax incentives for first-time home buyers for the growth of real estate sector, which is facing multi-year slowdown.
“The current government has done a lot for the Indian real estate industry, even when it was in the form of hard decisions like demonetisation and the disruptive but very necessary RERA,” ANAROCK Chairman Anuj Puri said in a report.
He said although government has taken proactive stance towards cleaning up and regulating the sector, there are still several policy-related pain points where the upcoming Union Budget can make a decisive difference.
“As of now, under-construction properties are levied a GST of 12 per cent, which is significantly higher than the previous taxes. The government should strive to make GST a tax-neutral proposition so as to help in reviving demand in the real estate sector,” Puri said.
He further sought clarity and transparency on input tax credit that would help in rationalising the taxes.
On single-window clearance, Puri wondered why this policy initiative has not been taken so far.
“If implemented, single-window clearance can significantly reduce the overall projects cycle time and developers will be able to focus on their core business of project execution,” he said.
Post implementation of the real estate regulatory law (RERA), Puri said it has become all the more important to facilitate smooth clearances and approvals.
On industry status, he said it has been a long-standing demand which has so far gone unmet.
“Real estate is one of the key GDP contributors and the fourth-largest employment generator in India. Extending industry status to the entire real estate sector will help developers to raise funds at lower rates and, in turn, reduce their project costs – which will help in pushing demand”.
In last year’s budget, the government gave industry status to affordable housing segment.
ANAROCK demanded higher income tax benefits for the first time home buyers.
“Currently, a first-time homebuyer can claim an additional tax deduction of up to Rs 50,000 per financial year under section 80EE of the Income Tax Act, provided certain conditions are fulfilled. Tax exemption should be increased so as to incentivize first-time home buyers,” Puri said.
ANAROCK sought further tax rationalisation on REITs (Real Estate Investment Trust) as the first REIT is yet to be listed in India.
“Simplifying the taxation norms for REITs is a critical requirement for listings to start flowing in, which will benefit the entire real estate sector by the enhanced participation of a much broader bandwidth of investors,” Puri said.