National Real Estate Development Council (NAREDCO), an apex body of real estate sector, has requested Government to address the key concerns of the real estate industry and homebuyers, offer tax incentives across housing segments, and boost buyer’s confidence through a slew of measures in the upcoming interim Union Budget 2019-20.
The national apex body has presented its pre-budget memorandum to the Ministry of Finance and Ministry of Housing and Urban Affairs, wherein it has put forward its recommendations for the consideration of the Government.
Commenting on the recommendations, Niranjan Hiranandani, President, NAREDCO said, “The real estate sector is passing through a difficult phase because of some harsh, though progressive, regulatory and financial reforms undertaken by the government over the last two years. These measures, to improve liquidity and rationalisation of GST for under-construction properties, will help address the concerns of the industry to a large extent.”
Let’s have a look at these recommendations.
GST rationalisation
One of the key demands is to rationalise the GST rate on under-construction properties by bringing it down from 18% to 8% slab with land abatement.
Extension of 80IBA provisions for affordable housing
“The scope of Section 80IBA of IT Act 1981, which allows a deduction equal to 100% of profits and gains derived from the affordable housing project, should be widened by bringing all categories of affordable housing meant for EWS, LIG, MIG-I & MIG-II under its purview.
“The memorandum suggests that 80IBA should include projects approved on or after the first day of June 2015, when PMAY was launched, instead of June 1, 2016, prescribed, and its applicability extended to projects up to 200 sq. mt. carpet area, instead of the current limit of 30 sq. mt. for four metros and 60 sq. mt. for other cities, to cover all segments of homebuyers. This is imperative to achieve the government target of ‘Housing for All’ by 2022,” explained Rajeev Talwar, Chairman, NAREDCO.
Additionally, the apex body has also recommended a reduction in FAR/FSI utilisation, prescribed in Section 80IBA, to 50% from 90% and 80% prescribed for four metros (Delhi, Mumbai, Chennai and Kolkata) and, other cities respectively to make it workable.
Promotion of rental housing
To add to the supply of housing, there are suggestions to use the services of companies engaged in the business of rental housing under the ambit of Section 80IBA. Further, to increase the deduction limit from rental income, under Section 24(a), from current 30% to 50% for general category and 100% for specially-abled, women, and senior citizens.
The revival of stressed projects
Highlighting the critical concern of the industry, the memorandum has raised the issue of stressed assets in the form of land parcels and delayed projects which have troubled the sector and home buyers for long.
“Stressed assets have been a cause of concern for developers as well as homebuyers, who are struggling to get possession of their booked properties. This can become an opportunity if government and lending institutions come forward and arrange the required fund to complete the stalled projects. NAREDCO calls upon government, banking institutions, and other lenders to infuse liquidity and revive stalled projects,” said Parveen Jain, Vice President of NAREDCO.
Some other key recommendations include:
• Exemption from tax on notional rental income from housing units held as stock-in-trade
• Exemption from capital gain, under section 54, if sale proceeds are used to buy houses one or more
• Increasing in the limit of interest deduction, under Section 24(b), to Rs 3 Lakh from Rs 2 Lakh
• The inclusion of stamp duty within the purview of GST
