Budget 2021: Give industry status to real estate sector

Budget 2021: Give industry status to real estate sector, reduce stamp duty

Sahil Vachani. Credit: LinkedIn

By Sahil Vachani,

We have started 2021 on a better note as the worst seems to be over thanks to the various measures announced by the Government along with steps taken by developers and the industry. In the last couple of months, both the residential as well as commercial segment particularly the office space leasing has gathered momentum.

With organizations and institutions providing prime importance to safety, health, and hygiene, the demand for Grade A office is anticipated to pick up. Occupiers are likely to prefer developer leased offices as it gives them comfort about hygiene norms being implemented with rigour.

Despite the sharp bounce back, the overall leasing has been substantially lower in 2020 as compared to 2019. Hence, it is paramount that the Government should think of supporting the sector through various means so that we can have enough supply of Grade A office spaces.

Allowing input tax credit to developers, especially those who build to lease, can be a big impetus. As of now, developers have to pay GST on various goods and services while constructing the project, but unfortunately, they are not allowed to set-off the GST paid, against the GST collected on rentals.

If permitted, not only it will attract more developers to build Grade A offices for leasing, it will also help in rationalizing rents, which will eventually help India establish a competitive edge over other countries where real estate cost is higher.

Fact that the real estate sector is one of the largest employment generators, and is also one of the significant contributors to GDP with close linkage to over 200 industries, it is important that the sector find its mojo back at the earliest.

For this, the Government should incentivize various state Governments to reduce stamp duty on the lines of Maharashtra and should consider providing industry status to the sector as that would significantly reduce the cost of funds, thereby paving way for the revival of the sector and economy as a whole.

(Author is MD & CEO, Max Ventures & Industries Ltd. aka MaxVIL)