Realty sector builds hopes on tax sops, industry status

Written by Sajan C Kumar | Chennai | Updated: Feb 13 2010, 05:10am hrs
The realty sector is pining hopes on a few measures like tax concessions, granting of industry status and relaxation of external commercial borrowing (ECB) regulations that it wishes to find their place in the Budget. Given the fact that India will be facing a shortage of about 26.53 million houses by 2012, there appears to be a consensus that the sector needs to be given some special attention in order to make it capable to cater to the demand.

Though the sector took a severe hit during the global economic downturn last year, many stakeholders believe the slowdown has also created some opportunities in new segments that were untapped.

Kumar Gera, chairman, Credai, says, There is enough requirement of housing in the country, which if addressed, can act as a stimulator for employment as well as improving India's GDP. Credai has always championed the cause of the real estate effort in India. All the recommendations put forth by us will help in bringing about more transparency and simplicity to the processes, while at the same time, they will address needs of various stakeholders from developers to end users.

Ramesh Nair, managing director, Chennai, Hyderabad, Jones Lang LaSalle Meghraj, says the Budget should offer incentives to developers to concentrate more on affordable housing. It should rationalise stamp duty registration charges for land so that obtaining the same for affordable housing becomes more feasible for developers.

Re-introduction of 80 I(B) and extension of 80 I(A) for income tax exemption would lead to a marked difference in buyers attitude which eventually reflects in the response towards affordable housing, he said.

Charting out the expectations from the Budget, Nair said it should give attention to extend the STPI scheme and also look at giving more incentives and tax breaks for mass affordable housing in urban areas besides increasing tax exemptions on housing loans, principal repayment and interest.

The Budget needs to provide some clarity on the STPI guidelines since many IT developers depend on it. In terms of the proposed introduction of a real estate regulator, it should be borne in mind that such a regulator should not necessarily aim to decide on rates, but rather should put down firm principles in terms of property dealings and also quality parameters in terms of rating of constructions, he said.

Pitching for the industry tag, Pranab Datta, vice-chairman and MD, Knight Frank, said the recognition of the real estate sector as an industry would benefit it in terms of greater access to funds and lower cost of borrowing. The lower cost of fund should ultimately benefit consumers. Besides, granting infrastructure status to the affordable housing and integrated township projects should be high on the governments agenda.