By Reeza Sebastian Karimpanal, President, Residential Business, Embassy Group
The real-estate industry has demonstrated resilience in H2 of both 2020 and 2021, with the Covid-19 pandemic highlighting the importance of owning one’s own future-ready home with greater flexibility to meet evolving lifestyle changes. Today, while the sector is at a stage of restoration and reaching stability, the upcoming Union Budget will play a vital part in supporting and defining its growth in the days ahead. Stimulating its recovery, a relaxation in taxes and GST will go a long way in benefitting the recuperating sector. The government must consider reintroducing the GST Input Tax Credit (ITC), which will decrease the tax liability of the developer, allowing for a reduction in the cost of construction and infusing affordability. For homebuyers, a deduction of interest on home loans under the Income Tax Act Section 24 will boost buyer sentiments, as well.
The pandemic forced the government to look at alternatives for minimizing the risk posed to the economy. Technology rose to tackle this challenge. The government should provide attractive subsidies or tax exemptions to developers who promote the use of technology. Additionally, the introduction of a single-window clearance system – a plea from developers for years now, will aid in making project-implementation faster and more seamless. This intervention can systemically resolve issues and streamline the overall construction cycle. Further, the government can look at the possibility of creating schemes similar to the Rs. 25,000-crore Special Window for Affordable and Mid-Income Housing (SWAMIH), ensuring expeditious completion of all stalled and stressed projects.
It would also be beneficial if the government considers redefining affordable housing as per the real estate standards of each city, and not per loan size. Though the government initiated deductions on mortgage interest rate under section 80EE and 80EEA, and the RBI defines affordability in accordance with loans granted, none of these factors should justify the definition of affordability.
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