Budget 2016: You might be one of the millions across the country looking to buy a home. And you may be one of the many who is not able to take the final step either because the home prices appear steep or you do not have enough surplus to sew up the deal.

There are huge expectations that Finance Minister, Arun Jaitley, would announce some measures to help home buyers go ahead and purchase their dream homes. Here are a few steps, if taken, that could make this a reality.

Boman R.Irani, Chairman & Managing Director, Rustomjee Group, real estate developers expects the following measures on this front.

Rework Tax Structure to flat 5% for end user and 15% for developer

Currently, customers are paying huge taxes when buying homes. In Maharashtra, 35% of the home value goes towards tax. The same requires to be carefully revalidated to reduce the burden on the customer as we move towards GST regime. Tax to end-users should be flat 5%, including stamp duty, VAT and Service Tax. And cap all premiums and taxes including VAT, Service Tax payable by the developer to 15%.

Increase deductible on interest to Rs 3 lakhs and give 3% subvention on home loan to end-user

Individual home buyer should be incentivised by increasing deductible on housing interest loan from Rs 2 lakhs to Rs 3 lakhs. This will definitely boost affordable segment home buyers. Another big incentive that may touch all segments of real estate buyers is giving subvention of 3% interest for 3 years.

Tax Breaks for the Industry for Affordable Housing

Real Estate Industry contributes 6% to GDP. However, no tax breaks are available to industry. But now to gear up for “Housing for All”, there is a need for tax break for the sector in affordable housing segment. Reintroduce incentive schemes like 80IA and 80IB for developers for affordable housing segment clearly defined definition of affordable housing which definitely varies from rural to Tier 3 cities to city like Mumbai where by Rs 50 lakhs should be affordable home.

Removal of Taxation on Annual Letting Value for Stock in Trade
In case of stock in trade, real estate developers are taxed as if those empty homes are let out. This Section 23 of Income Tax requires to be modified with effect to no tax on notional basis on stock in trade.

Denial of Tax Benefit to End User

Section 24 of the Income Tax Act (which provides for deductions on house property income) requires to be modified and provisions extended to 5 years from 3 years (on property completion from the time of loan was taken). On account of several delayed approvals most of the projects take more than 3 years to complete.

Industry Status to Real Estate

Real Estate sector should be treated in par with Infrastructure as Real Estate players are key contributor to decongest the city center by adding more development in peripherals of the city .​

Adding to this, Karvy Stock Broking mentions the following points to boost real estate:

Passage of the Real Estate bill:

This Bill seeks to set up a regulatory framework to govern contracts between real estate buyers and sellers by setting up Real Estate Regulatory Authorities across states, which will maintain records of projects, promoters and agents, and a database of violators. This will make the selection process transparent and easier.

Provide more incentives to boost development and consumption of green real estate:

The Budget should provide clear and convincing benefits to buyers of green real estate in the country. Stakeholders of the residential real estate sector definitely require more encouragement to invest in green real estate. Most home buyers in India are averse to paying an extra premium for such projects, and the low demand means that developers are not sufficiently active in this segment. The Budget should provide a combination of incentives to boost the development and buyer interest in green real estate in the country.

Remove DDT bottleneck in REITs:

Despite the announcement last year, there has not been a single REIT (Real Estate Investment Trust) listing in India to date. The primary reason is the presence of Dividend Distribution Tax (DDT). Until this vital change is made, REITs – which can almost single-handedly revive the Indian real estate sector – will remain elusive.