The real estate sector is an essential contributor to the Indian economy. It is the second largest employer in the country after agriculture, providing employment to a million people directly and indirectly.
In the past couple of years, the Indian real estate sector has witnessed a series of policy reforms such as demonetization, implementation of Real estate (regulation and development) Act (RERA) and goods and services tax (GST).
At the same time, the sector has been facing some external risks because of the recent non-banking financial crisis (NBFC) crisis and non-performing assets. While some measures have been initiated to revive demand, a lot more is required in order to change the fortune of the industry. As the Union Budget 2019 will be announced on February 1, 2019, the real estate industry has the following wish-lists
Major Tax Benefits To Homebuyers
An income tax rebate for home buyers would be the one most important factor that the sector would expect from the Union Budget 2019-20. It can be implemented by increasing the standard deduction for the first-time home buyers.
‘Industry Status’ To Real Estate
Granting of ‘industry status’ to the real estate sector has been a long-pending demand. It is time that the sector gets ‘industry status’. This step will enable realty developers to raise funds from the financial institutions at lower rates. Getting ‘industry’ status will also help the industry to be recognized as a priority sector, especially by the Reserve Bank of India (RBI) and other banks. In last year's budget, the government gave infrastructure status to the affordable housing segment and its benefits can be clearly visible.
GST Cut On Under-Construction Projects
The real estate industry expects a reduction of GST rate to 5 percent. Currently, the Goods and Services Tax (GST) is 12% on payment made for the under-construction flats and houses. And GST cut will bring home buyers back to the market as they will not have to carry the heavy burden of high GST rate on the properties on their shoulders. This will revive the real estate segment considerably.
Deduction On The Principal Repayment Of Housing Loans (Section 80 C)
In the Indian context, the ownership of a house is a lifetime goal. Currently, Section 80 C of the Income Tax Act does not give any major focus on housing due to the various competing investment alternatives. To address the dilemma of the house purchase decision and provide some boost to real estate sales, a separate annual deduction of Rs.1,50,000 for the principal repayment is required.
Inclusion Of Stamp Duty Within The Purview Of GST
Also, the stamp duty could be brought under the purview of GST. Keeping stamp duty out of the ambit of GST increases the tax burden on buyers. The tax burden is keeping buyers away from the real estate market and impacting the industry as well.
Single Window Clearance System
With the introduction of RERA, it is possible to address some of the shortcomings in the earlier operating structure of the industry. However getting timely approvals of the project is still remains one of the biggest challenges, and therefore it leads to delays in the delivery of projects to the buyers. Having a single window clearance system is one of the most desired expectations of both the developers, investors, and consumers. This move will help in reducing the time required in construction and giving possession to the buyers, which RERA has not been able to solve effectively. Therefore, a single window clearance is a must for the real estate sector will boost the overall scenario of real estate.