Union Budget 2019: Like many other segments, the real estate sector has some recommendations for the upcoming budget. Here're some of its key expectations.
Union Budget 2019: The presentation of the Union Budget by the newly-formed government is one of the most important events in the third quarter of this year. All eyes are set on the Finance Minister of India with the expectation that their concerned demands would be fulfilled. Like many other segments, the real estate sector has some recommendations for the upcoming budget.
For the past several years, the realty sector has been expecting the status of an industry. The industry status will allow real estate players to access low-cost funding from banks. This will lower the construction costs and ultimately help increase the demand for the commercial as well as the residential sector. The sector seeks a 5% reduction in GST rates on raw materials. The announcement of reduced rates would propel prospective home buyers to accelerate their purchase decisions, thereby leading the real estate market to pick up the pace.
We believe that the Union Budget 2019 would have a positive impact on start-ups. This would help boost the demand for the Indian real estate sector.
Stamp Duty should be brought under the purview of Goods and Service Tax (GST) to lower the burden of buyers. As of now it varies from state to state and is cumbersome for homebuyers. Many prospective buyers hesitate to take the plunge as they are wary of paying multiple taxes. Also, with stamp duty along with registration charges, the overall cost of owning a property increases. So, it can be subsumed under the GST. The announcement will help the buyers reach a decision and it will also increase the realty sales.
The sector also expects incentives for Green Building projects. With the rising need for housing and a clean environment, the demand for this segment is high. Considering the escalating demand, developers are coming up with world-class green building projects. However, the higher cost of construction of green buildings has kept a majority of developers away from investing in such projects. Hence, it is expected that the government will encourage developers with higher incentives in terms of FSI or come up with some schemes for such projects.
The Indian real estate sector expects attention to the premium housing sector. A lot has been announced for the affordable housing sector with little being offered for the luxury segment. Lower taxes and extension of interest subsidy for larger loans over the next one or two years for a limited period, subject to Tier I cities, would help the segment.
The real estate sector has been demanding for the External Commercial Borrowings (ECB) from a very long period of time. The sector expects that the government should allow the developers to raise funds through ECB for the housing sector.
The sector also expects that the budget will help set up hospitality ventures that will help showcase India’s richness to its people and to the world.
We hope that this year’s Budget will bring good news for the real estate sector with a proper and faster implementation of these recommendations. The sector is the 2nd biggest contributor to the GDP after agriculture and has high potential to make our economy strong.
(By Ravish Kapoor, Managing Director, Elan Group)