#Budget2017: Must Address Persistent Ambiguities Related To GST & Applicable Tax Rates For The Sector, Says Supertech's R K Arora

The real estate sector in India is the second largest employer after agriculture and contributes nine per cent to the country's GDP. This contribution to the GDP is expected to rise further in the years to come as the economy grows. The sector is also directly responsible for the development of over 250 ancillary industries such as cement, steel, paints etc. as such developments in the real estate sector have a cascading effect on all sectors of the economy.

The policy decisions and allocations made in the annual budget have a direct bearing on individuals as well as industries. The real estate sector is particularly sensitive to many of the policies that are announced both for individuals as well as different sectors and industries. The real estate sector is currently in a recovery phase after a prolonged slowdown and the recovery has not been quite satisfactory, this makes the Union budget 2017 critical to the successful recovery of the sector.

The Budget must, therefore, address persistent ambiguities related to GST and applicable tax rates pertaining to the real estate sector. The budget must also, on an ongoing basis continue to incentivise home buyers especially first time buyers to reinvigorate the sector. Any move towards incentivizing home buying would, in turn, help the government in achieving its ambitious objective of providing housing for all by 2022.

The hurdles facing the real estate sector are varied, one move that can single handedly remove a lot many of these problems is granting infrastructure status to the real estate sector. Such a move will enable real estate developers to become eligible for critical incentives and subsidies at both the central and state levels as well as open up funding opportunities for the real estate sector. The demand for infrastructure status to the real estate sector is not a new one; there has been a growing demand from the sector over the past several years that the sector should be granted infrastructure status. The demand is yet to be fulfilled and this budget can surely prove to be a major turning point for the sector.

Affordable housing has received a major push in the previous budgets; however progress on this front is far from satisfactory. There is a serious need to relook at ways to further incentivise not only the buyers in the affordable segment but also to attract private developers to launch more projects in the affordable housing segment. Easing of borrowing norms for affordable projects or provision of secured lending from government-owned financing institutions for affordable housing projects in the budget would not only go a long way in improving availability but also rejuvenate the real estate sector.

Although REITs have been excluded from DDT, there has not been a single listing till date as there exist tax hurdles for both the developers as well as asset holders. Removal of policies constraining the growth of REITs, therefore, is a major task for this budget. The government should look at reducing taxation and streamlining tax incidence for REITs properties.

The government must also look at ways to institute a single window clearance system for the plethora of mandatory and statutory clearance requirements for real estate projects if it really wants the real estate sector to grow. This is the single most important step the government can take to improve on-time delivery of real estate projects.

Budget 2017 must also look at bringing clarity with regards to eligibility to qualify as a beneficiary of the Pradhan Mantri Awas Yojana (PMAY) and enjoy subsidised interest rates. The benefits of the demonetisation exercise can also be passed on to the people in the form of lower rates.