Developers demand industry status for real estate sector

While a section of the realty enthusiasts expect hosts of sops from Pranab Mukerjee’s Union Budget for 2012-2013, there have been demands from property consultants and real estate developers to award ‘industry status’ to the realty sector.

"Grant industry status to real estate, since the sector is a major driver for economic growth and generates countless jobs across its various verticals and allied industries," Global Property Consultant Jones Lang LaSalle India Chairman and Country Head Anuj Puri told Business Standard.

Anuj also pitched for relaxing norms for repatriation of FDI in real estate to attract more investment in the sector.

Property consultants and developers in general expressed their willingness for incentives to promote affordable housing segment and an increase in the tax exemption on home loans. To boost supply, they have also asked for a single-window clearance for real estate development projects and FDI in multi-brand retail to create demand for retail space in shopping malls.

One per cent interest rate subsidy provided by the government for loans towards affordable housing should be "amplified and broadened" to include a wider price band of budget housing to benefit home buyers.

Expressing similar views, another property consultant in Chennai said that the ceiling of housing loans eligible to priority sector lending should be raised in view of high property rate.

That apart, property consultant DTZ suggested increase in tax exemption on home loans to stimulate end user demand, particularly for mid-range housing.

"Principal repayments should be treated as a separate tax exemption entity and excluded from benefits under section 80C... Deductions towards the total interest payable on the home loan should also be increased from existing cap of Rs 1.5 lakh," it added.

Currently,  an individual is entitled to claim both the interest and principal components of home loan repayments for tax benefits. The ceiling under tax benefits is capped at Rs 1.5 lakh towards the total interest payable on the home loan and Rs 1 lakh for principal paid. This is also part of the 80C available for other investments such as LIC premiums etc.

Confederation of Real Estate Developers' Associations of India (CREDAI) has requested the government to incentivise affordable housing segment and address the issue of high land cost and taxation issues.

"The prices of houses are becoming unaffordable by the day under the onslaught of high land prices, rising cost of construction and high taxation. We would like the FM to introduce some measure like tax exemption for affordable housing," CREDAI Chennai president Chitty Babu said.