Budget 2016: Wants Vs Needs

[] One of the main reasons why almost each year, developers are disappointed by the union budget, is because their demands aren’t always feasible for the FM to cater to. Here’s an analysis of how their wants stack up against the actual needs of the sector

Every year, prior to the Union Budget, the real estate sector goes into overdrive, with its list of expectations. Often, in this zeal, they fail to differentiate between wants and needs. More importantly, there is generally a huge chasm, between what is feasible for the finance ministry to offer and what is being demanded by the sector.

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A similar story seems to be unfolding, on the eve of Union Budget 2016-17. Among the routine demands, is that of granting industry status to real estate – something that is not even being considered by the government. Nevertheless, the industry body, National Real Estate Development Council (NAREDCO), has asked the government to grant industry status to the real estate sector, to enable it to recover from the severe slowdown. “Industry status will attract large companies and most importantly, inculcate ‘corporate culture’ and ‘industry discipline’.” This will immensely benefit the economy in general, and consumers in particular,” said NAREDCO’s president, Parveen Jain, in a pre-budget memorandum to the government.

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[] Budget 2016: Top 10 demands of the real estate sector

Among the numerous untenable demands that are made year after year, some legitimate demands are lost – for example, the demand for tax incentives to home buyers to revive housing demand and granting of infrastructure status by adding a clause to the definition of ‘infrastructure facility’ u/s 80IA of the IT Act 1961.

Brotin Banerjee, MD and CEO of Tata Housing, maintains that the government should grant infrastructure status to integrated townships, so that banks are able to extend priority sector lending. Incentives and special benefits to green and sustainable technology and methods of construction, should also be addressed in the upcoming budget, he feels. “The real estate sector continues to be plagued by double taxation and tax complications, which increase the cost of construction and eventually make housing more expensive for consumers,” Banerjee adds.

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Analysts point out that it would be better for the sector, to focus on demanding infrastructure status, as of now. The real estate fraternity’s budget wish-list, should also include a demand to increase the deduction available for interest payment on housing loans, from Rs 2 lakhs to Rs 3 lakhs per annum. This will counter the high interest rate regime, which is prevalent, owing to the fact that banks have not completely passed on the benefits of successive rate cuts to their borrowers. However, with the realty sector failing to speak in a single voice, vis-à-vis their budget wish-list, this year’s union budget may be yet another year where ‘realty proposes and the government disposes’.

(The writer is CEO, Track2Realty)

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Category: Lifestyle

Debora Berti

Università degli Studi di Firenze, IT

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