Budget 2017: Realty expects increase in tax deduction limit on home loans, clarity on GST tax rate, others

With nearly few days remaining for the government to announce its Union Budget for 2017-18, real estate industry players are expecting the government to increase income tax deduction limit on home loans, clarity on GST tax structure, Pradhan Mantri Awas Yojana (PMAY) scheme and providing grant status to the sector on lines with infrastructure to boost the realty market in India.

The Government of India will present the Union Budget 2017-18 on February 1 as against its traditional practice of presenting it on February 28. 

According to Sheltrex Developers, the government should provide incentives on home loans by increasing the tax deduction limit of buyers on home loans.

"Post the demonetisation move, we expect to see more incentives on home loans by way of increase in tax deduction limit for housing loans. In order to achieve Prime Ministers' dream of ‘Housing for all by 2022’, the government must look at classifying the affordable housing sector as infrastructure so that it attracts more foreign investments and eases the project finances for developers...," Sheltrex Developers chief executive officer Sandeep Singh Gaur, said in an e-mailed response to Zeebiz.com. 

Echoing similar views, Duville Estates director Tushad Dubash, said in an e-mailed response, " 'Housing for All' and 'Affordable Housing' have been major announcements of the government for the real estate sector in 2016. It would need strong private sector partnership to succeed and achieve its goal."

Sunteck Realty too expects the government to increase the tax deduction limit for home loans and hopes that the tax exemption provided to first time home buyers in the last budget is extended in the upcoming budget.  

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"On the home loans front, tax deduction limit for home loans should be increased, especially in metro cities like Mumbai. The current limit of Rs 2 lakh is very low in the context of ticket sizes being priced upwards of approximately Rs 1 crore. Also, it remains to be seen whether the tax exemption provided to first time home buyers in the last budget (units costing less than Rs 50 lakh with loan amount less than Rs 35 lakh) will be extended in the upcoming budget,” Sunteck Realty chairman and managing director, Kamal Khetan, said in an e-mailed statement to Zeebiz.

Expressing similar opinions on its Budget 2017 expectations, Marathon Group managing director Mayur Shah, said, “The sector is looking forward to boost in demand. Increasing the tax deduction limit to Rs 4 Lakh on housing loan is one of the ways in which people will be encouraged to buy homes. Currently, only Rs 2 Lakh deduction is available on housing loan. In cities like Mumbai, NCR or Bengaluru, where mid-scale properties start from Rs 60-80 lakh for Middle Income Group (MIG) housing, and amount of Rs 2 lakhs is insignificant.”

Sheth Corp expects the government to announce income tax exemption for affordable homes and incentives to first time home buyers in the affordable housing segment in the budget.

“The Government can exempt income tax for affordable homes built for economically weaker sections and lower income groups. The reduction of service tax will take off huge load off the shoulders of home buyers as they are already loaded with several other taxes,” Sheth Corp director Chintan Sheth, said in an e-mailed response. 

We expect the Finance Minister to roll out special incentives for first-time home buyers in the affordable housing category which will help in trimming the financial burden on home buyers and further enhance their buying power, Sheth added. 

Commenting on its Budget 2017 expectation, The Wadhwa Group director Girish Shah said, “Make housing affordable by reducing the cost of finance for both developers and buyers.” 

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Moreover, the industry expects the government to provide more clarity on the Pradhan Mantri Awas Yojana (PMAY) scheme meant for housing for all in the country. 

“Prime minister Narendra  Modi’s dream project  of ‘Housing for All by 2022’ can be easily accomplished when there is more clarity if metro cities too, can come under this ambit. This will enable buyers to avail better benefits in larger cities. Affordable housing is a volume-driven market and to boost supply in this segment, private builders along with government housing bodies will have to upscale their construction limits. This year’s budget should also focus on giving more clarity on application of housing loans under PMAY scheme,” Playtor Childspaces chief executive officer Sujeet Bhansali, said in an e-mailed statement. 

Marathan Group too expects the government to provide more clarity on loans taken under PMAY scheme in the upcoming budget. 

“More clarity for PMAY for Rs 12 lakh and Rs 9 lakh loans subventions. Also incentives to be given to create more rental housing stock by mutual fund and financial institutions,” Marathon Group managing director Mayur Shah, said in a response. 

On goods and services tax (GST), the real estate players expect the government to provide more clarity on the tax rates applicable to the sector and rebates on taxes applicable to affordable housing segment once the new uniform tax comes into implementation.  

“In the upcoming budget, we expect clarity on GST rates to know which rates will be applied to the real estate sector. Also, we are expecting benefits for the affordable housing sector so that there is no negative impact of GST. Post the GST rollout, there is also an expectation of clear framework of rebates on taxes applicable for affordable housing,” cited Sheltrex Developers chief executive officer Sandeep Singh Gaur in a statement. 

Echoing similar views on GST, Sunteck Realty chairman and managing director Kamal Khetan said, “While the implementation date for GST and its tax structure have been announced, more details on the applicable rate for the real estate and construction industry are still being widely discussed. Lastly, more clarity is needed on how the new corporate tax rate of 25% will be phased in.” 

Real estate developer K Raheja Corp is hopeful that the government will address key issues concerning the sector in the upcoming budget.  

“We are hopeful that the Finance Minister addresses certain key issues such as easing tax reporting and Income Tax slabs as well as the IT SEZ Policy and clarity on the much debated GST,” K Raheja Corp managing director-real estate development Kishore Bhatija, said in a statement. 

The real estate players expect the government in the upcoming budget to provide the sector an industry status to attract foreign investment and facilitate finance to developers. 

Marathon Group managing director Mayur Shah said, “Reduction of risk weightage has been the long pending demand of the sector. Real estate is one of the most important sectors for the economy. Treating at par with infrastructure status to the sector, developers will find it easy to obtain finance through financial institution at reasonable rate.” 

“We expect real estate to be given an industry status coupled with seeing more transparency in the working of the realty sector after Real Estate Regulation and Developement Act's (RERA) implementation. This will improve the buyers sentiment and encourage them to invest in real estate,” Kanakia Spaces managing director Himanshu Kanakia, said in a statement. 

Expressing similar views, Playtor Childspaces chief executive officer Sujeet Bhansali, said, “...It will be a good move if affordable housing gets an infrastructure status in the upcoming budget which will provide an impetus to the investors and also reduce costs for developers.” 

“Industry status for the realty sector has been long awaited and it would be a game changer if approved this time. Overall, it is expected that Union Budget 2017-18 will be a common man’s budget where optimistic changes in the income tax structure is predicted,” cited Duville Estates director Tushad Dubash in a statement.  

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