Abhishek Bansal, Executive Director, Pacific India Group
The real estate sector hopes that the Union Budget 2018-19 will help realty recovery. The ruling government has taken several new initiatives to accelerate economic growth and I hope that this trend continues with many more efforts to redress the plethora of pending issues in the realty sector. The most sought-after demand from the real estate sector is getting an industry status. This is something which is being asked for years so that funds can be easily availed for the purpose of long-term and short-term finances. This will also enable the sector to access loan at better interest rates.
With a competitive cost of funding, the benefit can easily be passed on to the customers. We also expect a single-window clearance system so that we can fulfill our promise of timely project delivery. In terms of financial instruments, what we expect is that the Reserve Bank of India should bring rules in order to direct implementation of lending rate policies that would benefit end users.
Ashish Shah, COO, Radius Developers
Given the government's focus on increasing transparency and building credibility in real estate, evident from the last budget, the expectations are simply higher. With RERA in place, we expect the government to implement more favourable reforms for speedier clearance to realise the potential of this important contributor to overall employment and GDP. The budget will certainly give homebuyers a reason to cheer with relaxed FDI norms for greater ease of doing business & incentives for first-time buyers.
Jaxay Shah, President, CREDAI National
The Union Budget 2018-19 will be the last test for the government on its promise of development. The real estate sector has borne the brunt of reforms. Demonetisation, RERA and GST have taken a toll on the ability of the real estate sector to sustain investment and growth. It's time for a healing touch to the sector inalienably tied to 'Housing for all by 2022'. We expect deep concessions in income tax for homebuyers of at least Rs 5 lakh per annum. Housing is a basic necessity and yet subject to both GST at 18% and stamp duty of 8%. There is a case to bring GST in line with other merit goods. Lastly, the affordable housing segment must be allowed the full benefit of infrastructure status by providing appropriate means for land financing to private developers.
Surendra Hiranandani, CMD, House of Hiranandani
Presently, the GST rate applicable to the real estate industry (on the sale of flats) is 12% of the sales consideration. During the pre-GST era, the applicable rate of service tax was around 4.5% and a value-added tax (VAT) of 1% was also levied, resulting in total tax outgo of 5.5% of the sales consideration. In the GST regime, the input tax credit is available on taxes paid on materials bought for construction, which can be the adjusted against the GST liability.The effective tax rate post adjustment is quite high as compared to the old rate of 5.5%. Further, stamp duty continues to remain in force even after implementation of GST and the rates vary from state to state, which increases the costs for the consumer. We hope that the state governments abolish the same or merge with the existing GST rates. Owing to aforesaid factors, we feel that the present GST rate must be revisited and stamp duty should be abolished.
Kishore Bhatija, Managing Director, K Raheja Corp
2017 was certainly a year of change with the implementation of several reforms, which brought in consolidation and transparency in the sector. In 2018, we look forward to a budget with amendments that will boost the growth of the economy and that of the realty industry. Certain key areas like industry status to the full real estate industry, streamlining taxation norms for REITs, rationalisation of GST, stamp duty reduction or uniformity, implementation of single-window clearance, and clarity on input tax credit need to be addressed.
Amit Ramani, Founder & CEO, Awfis
Various path-breaking initiatives and policy reforms implemented by the government in 2017 have already paved a strong foundation for a new India by 2022. 2018 has started on a strong footing with positive momentum driving growth across different facets of the economy, especially since the execution dust of demonetisation and GST implementation has almost settled in. In 2018, the office and retail sector is expected to show higher returns in the Indian real estate sector. Institutional investments in the commercial real estate will be on an upsurge and shared workplaces will continue to grow with flexible leasing structures. We expect the budget to focus on smart city growth, infrastructure with a focus on commercial micro-markets and made in India-focused businesses.
Prashant Solomon, Managing Director, Chintels India and Hon. Treasurer, CREDAI NCR and Convenor of CREDAI National
It is expected that the Budget 2018-19 will focus more on infrastructure projects and housing sector this year. Some of the major issues that have been pending for some time now demand closure this year are granting of industry status to the sector, single-window clearance to reduce delays in the approval process, reduction in GST rates and corporate tax rates. I believe that the real potential of REITs is yet to be realised in India. The reduction in long-term capital gains holding period for REITs and streamlining of taxation norms will make it more attractive and incentivised for investors. REITs should be extended to the residential sector as well. The sector holds immense potential and investment opportunities. With the right reforms, it can not only address the future challenges to the society, but also go a long way in boosting the country's economic confidence.
Ashwin Sheth, Chairman and Managing Director, Sheth Group
There are high expectations from the Union Budget 2018-19, especially since it will be the first in the GST era. A reform that has been long due is granting the industry status to the real estate sector for a proper overhaul. This move will complement the government's recent initiatives to bring some form of structure to the industry. While incentives have been provided to boost the affordable housing segment, there needs to be a reduction in the cost of land to incentivise developers to build budget homes. Additionally, interest rates on housing loans should be reduced to benefit a broader segment of homebuyers and increase demand.
Timely completion of projects has always been a concern, and a single-window clearance will help to swiftly execute projects making it a win-win situation for developers and homebuyers. As for the tax structure, adequate measures need to be taken to bring down the taxes paid by the average Indian to allow greater affordability. Reducing the stamp duty charges or bringing it under the ambit of GST in the lowest slab will bring about uniformity and make home-buying financially easy.
To provide relief to first-time homebuyers, we expect a deduction of Rs 50,000 under section 80EE of the Income Tax Act on loans sanctioned post-March 2017 as well. Clarifying the taxation norms for REITs is the need of the hour for listings to start flowing in as it will benefit the entire sector by the large bandwidth of investors.
Tushad Dubash, Director, Duville Estates
Demonetisation, RERA and GST have brought out many changes in the real estate indsutry. These changes have some positives and ambiguities. The government would do well to ring in some changes that make taxation issues fairly clear like one-window clearances or uniform tax slabs, which from a customer standpoint, will provide a fillip to those homebuyers who have been postponing their purchase decisions due to various reasons. It would help significantly to reduce income tax rates too.
I also feel that the customer buying preference would move towards those players who are well-capitalised and whose construction finances have been well-secured. From a builder standpoint, one remains hopeful of a further reduction of GST on under-construction projects to help accelerate demand. There should also be incentives for construction of green buildings, keeping in mind the challenges to the environment. The government should also offer higher FSI and exemptions to promote green sustainable developments.
Samyak Jain, Director, Siddha Group
The clearance and approval process for real estate projects needs further improvements. With RERA already in place, a single-window clearance system is now the need of the hour that will ensure faster approvals, which in turn, will help developers to deliver projects on time. The realty sector is one of the significant contributors of GDP, hence the much-needed 'industry status' will help developers gain finances at lower rates, and in turn, reduce the project costs which will help push the demand.
Additionally, a change in the incentives for first-time home buyers such as increasing the current tax exemption limit from Rs 50,000 to Rs 2 lakh will boost the confidence of first time homebuyer and will also help improve the buyer's sentiments. The announcements to be made at the upcoming budget will be crucial as it is the first budget post the implementation of the unified tax regime, GST. Even though the government has taken a positive stance towards a more transparent and regulated real estate sector, there are still several policy-related changes that can make a significant difference.
Sankey Prasad, Chairman and Managing Director, Synergy Property Development Services
With the implementation of RERA, REIT and GST last year, the real estate sector continues to be in the limelight this year. From the upcoming Budget 2018, the biggest expectation would be the inclusion of the sector in entirety under the GST regime, and not just the properties under-construction, as is the case now. Also, it is expected that the Budget will cut down the long-term capital gains holding period for REITs from three years to one year. This would bring the investment opportunity at par with equity investments and would make REITs more palatable to investors.
While the Government has already taken several steps to make housing affordable, the Budget could introduce a certain percentage of tax on holding on to inventory after all aspects of building construction are complete, and the occupancy certificate has been obtained. The real estate sector may be granted 'industry' status, which will help the sector to access long-term financing at lower costs. The recent move allowing 100% FDI under automatic route in construction development by the government is a growth driver for the country, as there is no any government approval required for the overseas investors.