Budget 2018: Steps That Would Bring Home Buying In Vogue, Once Again
The Budget wish-list from the real estate might seem to be carrying certain unreasonable demands. If states refuse to bring down the stamp duty, for instance, there is little Jaitley could do to make them do so. However, desperate times call for desperate measures—the second-biggest employment generating sector in India is suffering from a major fall in new launches and a significant fall in sales numbers.
While the FM in Budget 2018-19 must announce measures that enable the sector to overcome its long-going ailments, states should also try to focus on the same points in their respective Budgets.
Now, what is the need of the hour?
Making affordable housing really affordable
If you buy a home for Rs 50 lakh, you have to be ready to pay not less than Rs 60 lakh. Hold on, we are not talking about the expenses you will have to make on carrying out some minor changes in your new home or the large house-warming party that you must plan for your family and friends. In Delhi, for example, a six per cent stamp duty on the total worth of the property must be paid by a man who buyers property here. Another one per cent must be spent to pay registration charges. The demand for entirely scrapping these charges has been long-standing, but, states refuse to nudge on the subject since it is a major source of revenue for them. The Centre has been time and again asking states to rationalise these charges without being able to make much of a difference. As a matter of fact, states suffer a great deal when prospective buyers turn into fence-sitters. Time is ripe for them to be a bit rational about stamp duty and registration charges if they want these transactions to take place.
Stop treating luxury like it is a sin
Affordable is the word that defines the major efforts made by the current government in its infrastructure push. Since we are a nation where the growth is driven by the middle class, they must be the focus of the government effort. However, the government must be equally conscious of the contribution made by other segments, too, and announce measures that are beneficial for them, too. Union Budgets often fail to shower any goodies on buyers of second homes. Since they are equally responsible for driving the demand, this section must also have the government's attention.
Giving buyers a break from taxing time
One prime factor behind buyers investing under-construction properties is the “affordability” factor. But, when one sits and makes all the calculations, one finds that these options are not really as affordable as they are perceived to be. Apart from paying the stamp duty and registration charge, buyers must also bear the burden of additional taxes. Before the GST regime came into force, buyers were liable to pay service tax and value-added tax on the purchase of under-construction homes. Now, a tax of 12 per cent must be paid under the new regime. While the government has already decided to reduce the rate eight per cent for homes bought under Credit-Linked Subsidy Scheme under the Pradhan Mantri Awas Yojana, those who are not eligible to apply for loans under the government scheme would have to pay full tax. A re-look at rates would be a welcome step.
'Real' efforts towards women empowerment
Across India, women pay less as stamp duty and pay lower interest rates if a property is registered in their name. No such privilege is given when it comes to paying the GST. The same is true of property tax. Since the government is making its best efforts to increase property ownership among women, it may consider offering a lower GST rate and exemption in property tax to women buyers of property.