R eal estate sector expects the government to come up with incentives in the budget that will put it on the recovery path.

“The government is already on the right track. It is planning to increase the income-tax exemption limit available for interest payment on home loans to Rs 2.5 lakh a year. However, there are still a number of issues to be sorted out,” says Anuj Puri, chairman & country head of Jones Lang LaSalle Meghraj.

Santosh Kumar Rungta, president of Confederation of Real Estate Developers Associations of India (Credai) says, “The real estate sector alone can contribute 1-1.5 per cent to the GDP if the government makes efforts to solve urban housing problem while moving towards a slum-free urban India. We are seeking fiscal incentives to encourage ‘affordable mass housing’ with unit sizes ranging between 300 sq ft and 1,000 sq ft.”

The industry realizes that the government will have to face a daunting task in coming out with a balanced budget. “We understand that the finance minister’s task to balance between industry requirements and widening fiscal deficit will be challenging and trust that the decision would be taken after careful consideration of many aspects. However, we hope that levy of fresh taxes, which could adversely impact the sector, would be avoided. Chances of service tax being increased to 12 per cent, cenvat rate being reversed to 10 per cent and excise duty on steel and cement being brought back to 12 per cent, are high,” says Sachin Sandhir, director and country head of Royal Institute of Chartered Surveryors (RICS) India, an organisation of property and construction professionals.

Affordable housing-related sops and tax holidays for those involved in the sector are on top of the agenda. Other demands include further relaxation of ECB and FDI norms, rationalisation of stamp duty and registration charges, confirmation on abolition of service tax on renting immovable property, already announced by the high court, clarity on extension of tax waiver for STPI units and extension of tax holiday under section 80-IA (4) (iii) for developers who build industrial parks, which in turn would boost the recession-hit IT industry

"By considering the hiking of income-tax exemption for interest payment on housing loans, the government has hit the nail. Grant of infrastructure status would bring relief to the hospitality industry and boost upcoming hotel projects in the country. The budget should take a decision on FDI in retail. We hope that VAT on cement/RMC would be reduced to 4 per cent, says Mahesh Iyer, chief financial officer of Mumbai-based Phoenix Mills.

“The budget should reintroduce tax exemption for developers who construct flats of smaller sizes. We hope that the budget would speed up real estate investment trust (REIT) and REMF regulations. SEZ units should be allowed to raise external commercial borrowings (ECB's). The removal of sales tax on retail/real estate and the additional risk weightage for loans will go a long way in providing relief to the Indian real estate sector in these difficult times," he adds.

According to Assocham’s Business Barometer (ABB) Survey on ‘Flowing Sentiments in the Real Estate Sector’, respondent CEOs sought single-window clearances for all affordable housing schemes on the line of SEZ clearances to enable fast development of units and achieve the short fall of about 26 million houses at the earliest.

About 76 per cent of the respondents termed the stimuli given to the sector through fiscal and monetary measures as inadequate to help boost demand.

However, of all the measures taken by the RBI and commercial banks, 64 per cent of the respondent CEOs felt that RBI’s allowance to banks to restructure loans to developers has been the most successful in improving the liquidity situation.