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“We believe that the real estate sector can positively impact the Indian economy. We gave suggestions for creating a positive environment for the real estate sector,” Kumar Gera, president of the confederation of real estate developers associations of India (Credai) told reporters after meeting the finance minister. “We have asked the finance minister to continue with the present bank interest rates for real estate and for home finance”.
Pranab Mukerjee met representatives of the industry as part of the pre-budget consultations. The minister also discussed issues confronting the real estate sector and ways to speed up work for developing infrastructure for the Commonwealth Games to be held in Delhi in 2010.
Leaders of the real estate sector, besides seeking infrastructure industry status, also urged Mukherjee for tax concessions on housing loans in the planned taxes code, an issue over which the government has sought feedback from the real estate sector. Gera said, “We have also asked for relaxation in FDI norms for the sector such as a three-year lock-in period”.
One of the representative who attended the meeting said that the issues discussed during the course of the meeting included financing to the sector, affordable housing, external commercial borrowing (ECB) and loan restructuring. On affordable housing, a segment that Gera said will play a critical role during the year, the discussions revolved around “incentives for affordable homes and tax element.”
Developers want the government to make it easier to raise foreign capital in the form of ECBs and hope that these borrowing are extended to even special economic zones (SEZs).
On home loans, the developers are believed to have asked the government to raise income tax rebate to Rs 3 lakh a year on the interest component from Rs 1.5 lakh at present. Proposals also include that principal amount applicable for rebate increase from Rs 1 lakh to Rs 2 lakh.
Pranab Ansal, managing director and vice-chairman of Ansal API, told FC Estate: “It would be desirable to raise the interest deduction limit of Rs 1.5 lakh in the computation of income from house property under Section 24 of the Income Tax Act, to Rs 3 lakh”. He said that stamp duty could be reduced by 4-5 per cent and made uniformly applicable across all states. Also, if stamp duty has already been paid on one transaction, there should be a mechanism to provide concession or a system of credit for any subsequent transactions.
Sandhir, India head, RICS, said, “Considering that the real estate and construction sector is back on the recovery track and 2010 is looking bright in terms of overall demand and activity, it is unlikely that the budget will bring in significant changes, sops or concessions. Despite the widening fiscal deficit (government borrowing), the last year saw stimulus packages being given to boost the economy, all of which are starting to bear fruit. As a result, the upcoming budget might look to cut back some relaxations.’’
Most developers seem to agree. Says group executive director of DLF, Rajiv Talwar, “We are following a common agenda of all companies.’’ That seems to be a general spirit of bonhomie in a new year.
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