'States must cut stamp duty to boost housing sales'

States must cut stamp duty to boost housing sales: Naredco President Hiranandani

Hiranandani said the Centre should incentivise rental housing, increase tax sops on interest paid on home loans

Niranjan Hiranandani said the government should stop taxing unsold inventories lying with developers. Credit: PTI

The Maharashtra government's decision to reduce stamp duty on registration of properties has helped boost housing sales in the Mumbai region during this pandemic and other states should follow suit to give a fillip to the real estate sector, Naredco President Niranjan Hiranandani has said.

In an interview with PTI, Hiranandani, the founder and Chairman of Mumbai-based Hiranandani Group, said the Centre should incentivise rental housing, increase tax sops on interest paid on home loans and stop taxing unsold inventories lying with developers.

Stating there was a need to set up more stress fund like the government-backed Rs 25,000 crore Special Window for Affordable and Mid-Income Housing (SWAMIH) fund, he said the centre should enable banks and financial institutions to set up at least five similar funds totalling Rs 1,25,000 crore.

He also demanded that the section 43 CA of the Income Tax Act, which has been relaxed recently to allow the primary or first sale of housing units of up to Rs 2 crore at a price that can be 20 per cent below the stamp duty circle rate.

Earlier, the law restricted the differential between circle rate and agreement value at 10 per cent.

"Section 43 CA, which has been amended, is not correct and it should be removed. This section needs to go and go very quickly," Hiranandani said.

He said the benefits of the amendment are limited because of the strict conditions such as price cap of Rs 2 crore, and its applicability on residential properties and first-sale only.

Hiranandani said housing sales in Maharashtra, particularly in Mumbai Metropolitan Region (MMR) and Pune, during October-November, were higher than the year-ago period, driven by a reduction in stamp duty by the state government.

Other states must follow this model, he said.

"As Naredco, our state chapters are taking up this issue," Hiranandani said.

On stress fund, Hiranandani said there is a need for four-five funds of Rs 25,000 crore each to complete stalled and stressed housing projects.

"SWAMIH fund is working but it is not enough. I want four or five funds to be created. Various banks and financial institutions are ready to set up such funds. We do not need more fund from the government and it should only enable the creation of similar funds," he said.

Many foreign funds are ready to participate and invest if domestic financial institutions come out with stress funds for the real estate sector, Hiranandani said.

In November last year, the Centre had announced a Rs 25,000-crore fund to help complete over 1,500 stalled housing projects comprising 4.58 lakh housing units across the country.

SBICAP Ventures is managing the Rs 25,000-crore stress fund SWAMIH.

The Naredco President also sought that the government should not tax unsold housing inventories.

"The government wants more houses to be constructed, then why it is taxing unsold flats," he said.

It levies tax on notional rent on unsold inventories after two years. The period is counted from the end of the year in which the project gets completed.