The Confederation of Real Estate
Developers’ Association of India (CREDAI), a private realty body, has come out
with serious of measures that the Union Budget 2012 should include to benefit
the real estate sector in India, which has been in negative growth for the last
few years.
 |
| T Chitty Babu |
From years the real estate sector
has been facing problems like slowing economy, delay in decision making process
and hike in interest rates. The Body’s Tamil Nadu chapter has demanded for single-window
clearance for real estate development projects, granting of industry status to
real estate, since the sector is a major driver for economic growth and the
second largest provider of employment after agriculture and relaxing norms for
repatriation of FDI in real estate.
The realty body also recommended
to hike the housing loan interest tax deduction from the existing limit of Rs
1,50,000 and also accounts the principal as separate entity not to add to the
80C section.
CREDAI also urged to amend legislation
on REITs to provide exit opportunities to real estate investors as the market
environment should be more investment-friendly.
“I strongly believe that reforms need to be
ushered in our sector and amendment to the housing policy in order to address
this huge demand is the need of the hour. Affordable housing sector should
continue to grow based on the incentive given for borrowings from banks for
homes and the same should be further enhanced,” said T Chitty Babu, CREDAI,
Tamil Nadu.
CREDAI has the following recommendations
to be incorporated in the budget 2012:
·
Government should roll
out a incentive based IT Policy for Tier 2 and 3 cities ( like STPI ) to
promote IT and generate more employment
·
The
Government has 1% interest rate subsidy provided for loans towards affordable
housing. The scope of this subsidy should be increased to include a wider price
band of budget housing to benefit home buyers, especially in lower income
groups.
·
Allocate
more funds to the Rajiv Awas Yojana (RAY) for urban housing targeted at
the EWS and the LIG sections
·
Enact
provisions for Special Residential Zones (SRZs) to incentivise the growth of
housing stock at targeted locations
·
Relax
FDI upto 51% into multi-brand retailing
·
Increase
infrastructure spending in urban areas in order to unlock the value
of hidden land assets in suburban and peripheral districts
·
Increase
outlay to Jawaharlal Nehru National Urban Renewal Mission (JNNURM).
•
All
Pending Applications applied under the original Industrial Parks Scheme of 2002
should be cleared both under the Automatic and Non Automatic Route.
•
No Service
tax should be applicable on transaction between developer and land owner
•
The real
estate developers should be allowed to continue making payment of Service tax
on `receipt basis' instead of `accrual basis' as prevailing now.
Deduction for principal repayment / interest of a housing
loan
Present limit for deduction under
section 80C is INR 100,000
•
Increasing the threshold limit for the deduction
would provide relief to the middle class
•
Increase disposable income in their hands
•
In addition to the present deduction upto Rs 100,000, a separate limit up to Rs 300,000
deduction be permitted for repayment of principal portion of housing loan for
self occupied residential property
Present limit for
deduction of interest against “Rental income” under section 24(b) is INR
150,000 for self occupied property
•
Increasing the threshold limit for the deduction
would provide relief to the middle class
•
Increase disposable income in their hands
•
Limited to be enhanced to INR 300,000 for self
occupied property Capital Gains
•
36 months holding period for qualification as a long
term capital asset
•
Encourage
investment in real estate and to provide liquidity to investors
•
Reduce the holding period for qualification as a
long term capital asset to 12 month.
•
Tax @ 20
percent on long term capital gains on transfer of house property
•
Rate of 20
percent introduced when the maximum marginal rate was 50 percent
•
Reduce the tax rate on long term capital gains on transfer of house property to 10 percent
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