What does Indian real estate require from the Union Budget for 2018-19? Real estate has witnessed a major transformation with the advent of RERA and GST which came after demonetization. This led to a clean-up of the sector and has increased buyer sentiments and confidence due to increased transparency in the entire process. Real estate developers and companies will be hoping for a single-window system of clearance from the 2018-19 Union Budget. This is something that is badly needed in order to enable the Government of India to achieve its mission of Housing for All by 2022. The approval and clearance procedures in case of residential real estate have been pretty tedious and have often hindered swift development.
Single-window clearance will lead to reducing the entire duration of projects and developers will be able to focus better on their existing projects. After the introduction of RERA, it is even more necessary to ensure facilitation of approvals and clearances in order to keep avoid execution linked delays. The real estate sector will also benefit if the Government confers industry status on it. Real estate is one of the largest contributors to the country’s GDP and also generates huge employment. Giving industry status to this industry will help developers raise necessary funds at lower rates of interest and also lower project costs which will help in boosting overall demand.
Real estate developers will also be hoping for more simplified taxation regulations as far as real estate investment trusts or REITs are concerned. This will lead to more investments coming into the sector and more investors will participate. There should also be higher income tax incentives for first time home buyers who can currently claim an added deduction up to Rs. 50, 000 under Section 80EE upon fulfillment of specific conditions. The GST rates, according to several industry insiders, should also be brought down by the Government. The rate of 12% on properties under construction is higher in comparison to earlier taxes. The Government could make GST absolutely tax-neutral in this case in order to boost demand in the sector. There should be total clarity with regard to input credit to bring about higher rationalization in taxes.
Real estate developers will also hope for incentives and rewards in case of green buildings. The Government could consider some incentives by way of tax exemptions or floor-space index (FSI) for real estate developers coming up with green housing projects and making use of eco-friendly technologies.