Budget 2018: What Homebuyers And Developers Are Expecting
Come February 1 and Finance Minister Arun Jaitley will present the Union Budget for the financial year 2018-19. This will be the last Budget Jaitley would be presenting before the next general elections due in early 2019. Next year will be a vote-on-account where Parliament will approve the only routine expenditure. So, this could be the last chance for the present Union government to please the real estate industry as well as homebuyers.
The stakeholders who witnessed a slowdown due to delay in the setting up of state real estate regulatory authorities, clarity on the Goods and Services Tax and demonetisation, have certain expectations from the FM this Budget.
Here is what the stakeholders of the industry are expecting:
A boost to rental housing
Rental housing has remained one of the key agendas for the real estate developers, not much has been done in the past by the government to boost this segment. In the budget memorandum submitted by the National Real Estate Development Council (Naredco), a strong demand for incentivising rental housing and taxing the income from rental properties at a flat rate of 10 per cent has been made. Also, the deduction from rental income under the Section 24(a) is expected to be raised to 50 per cent from 30 per cent.
Tax relaxation in notional rent income
The developer community is also putting forth the demand to provide tax relaxation on the notional income for house property. Under the notional income, the Income-Tax Department taxes the owner of the property if the home is kept vacant for more than a year. Taxing notional rent after one year from the end of the financial year, in which completion certificate is received from the authority, leads to severe financial implications for the developer as well as for the homeowner.
Free market for affordable housing policy
The developers are now looking for a further boost to the affordable housing segment, which was given an infrastructure status in the Union Budget 2017-18, by providing a free market and pre-approval for developing affordable housing projects. The developers are demanding for a removal of maximum quota for creating housing as the demand for affordable homes is not going to see a drop anytime soon.
Rationalisation of GST
As GST still remains a confusion for the real estate sector, there is a demand for the FM to cut down the tax on real estate to 12 per cent with 50 per cent abetment for land and input tax credit. This will bring the effective GST rate at six per cent, which in turn will be tax neutral for the end consumers.
Creation of national fund for stalled projects
There has been a severe shortage of liquidity in the sector after Prime Minister Narendra Modi announced demonetisation in November 2016. The need is to set up a national fund for stalled projects, which would act as a much relief for homebuyers if the government could create a national fund to finance delayed or stalled projects. Apart from this, for the land parcel, where the work has not yet started, should be taken back and cash in hand should be provided to the owners. This would help the developer to complete ongoing projects.