Looking for budget push

The realty sector expects a breather from the budget to be presented on Wednesday

With the real estate and property market continuing to be in a low, thanks to the general economic conditions and the impact of demonetisation, the industry is looking ahead to the Union budget to be presented on Wednesday.
In addition to the general expectation of an increase in the income-tax exemption limit, a move that will leave higher disposable income in the hands of individuals that could boost consumption leading to economic revival, the industry’s expectations vary from a higher tax exemption limit for first-time homebuyers to industry status for the real estate sector among others.
“First-time homebuyers were given an additional Rs 50,000 tax exemption in the last budget for a house up to Rs 50 lakh, with a loan of up to Rs 35 lakh. This mostly benefited end-users in tier II and III cities, but not as many in metros, where housing is largely above this specific limit. A higher limit specific only to metros can be introduced,” feels Anuj Puri, chairman and country head of JLL India.
“Also, can the middle class youth buying their first house in an affordable project get additional income-tax incentives for at least 5 years? Given the lack of ins?titutionalised rental housing in cities, such a move could spur many fence sitters into moving from rented apartments to own houses. It could also make developers come up with products suiting this segment,” said Puri.
The government should also look at the option of increasing the tax deduction limit for housing loans, especially for buyers in metros. The current limit of Rs 2 lakh is insignificant, given the ticket sizes in cities, especially in metros like Mumbai. The tax exemption limit should be auto-set to match inflationary trends in a financial year. Further, tax concessions on house insurance premiums could be introduced to encourage end-users to insure their homes,” he said.
“Housing for all by 2022 being national objective, we can expect more favourable provisions towards affordable housing and EWS/LIG housing. Having prioritised affordable housing, it’s desired that the budget shall focus on allocation of funds specifically for building infrastructure and improving connectivity in the peripheral areas of cities. Without this, it will be difficult to provide affordable housing in cities and also augment the housing supply at affordable prices by the private developers,” feels M Murali, managing director, Shriram Properties.
“Since demonetisation, the sector is expecting greater facilities and impetus to the real estate industry. The recently announced incentives for affordable housing and low-cost housing are just the beginning. The expected industry tag to the sector is a long pending demand and will improve better financial flow and management. Further, the income-tax exemption for affordable and dwelling units of a particular size will ensure that greater reach for demanding homebuyers,” feels Suresh Hari, secretary, Credai Bangalore.
“Due to unsold inventory and lost confidence of the end-buyer, the real estate industry needs a push from the government in the budget 2017. The realty sector is expecting increased benefits for buyers such as increase in deduction limit available under section 24 of the IT Act, the deduction towards interest on housing loan should be allowed in the previous year in which interest is paid by the taxpayer, irrespective of the year in which the property is acquired or constructed,” feels Amit Singhania, partner (tax), Shardul Amarchand Mangaldas & Co.