BENGALURU : Following a period of fluctuation after demonetisation, the real estate sector looks towards lower interest rates on home loans as banks are flush with fresh deposits. Higher tax benefits for giving a boost to the affordable home segment is one of the prime concerns expressed by realtors, who also want incentives for first-time home buyers and industry status for real estate.
The present limit of Rs 1.5 lakh for tax benefits should be raised to Rs 3 lakh, said Ramprasad Padhi, president, Association of Real Estate Agents (RERA), Mumbai. “With higher tax limits, if I have some spare funds with me, I will think of buying a property instead of it lying in my bank account. This will not only spur buying but also ensure that rental stock will come up in the market. At present, the ratio of supply to demand is skewed as letting out your house to rent is also taxable in the highest bracket.”
The government also needs to give more incentives to those building affordable housing, said Padhi. “The margins are very low. Hence, builders usually focus on mid-segment or the premium.”
P N C Menon, founder chairman of Sobha Group, also stressed the need for tax benefits to corporates when it came to affordable housing. “In recent years, for individual home buyers, prices have continued to increase by 7-10 percent per year.We would like to see the government increase income tax benefits for this group of home buyers. Considering the affordable housing segment, we would be delighted to see income tax benefits that can be extended to corporates when they expand through new construction.”
With the introduction of goods and services tax (GST), homes would now attract a tariff and it would be beneficial if home buyers can come under the lowest possible slab of the GST, enabling greater affordability for potential home buyers, he added.
The sector was keenly awaiting the government’s decision on GST rate slabs and categorising the sector in a 12 percent slab would be ideal to reduce the cost of apartments and increase affordability, observed Surendra Hiranandani, chairman and managing director, House of Hiranandani.
Further, the government should put in place single-window clearance for projects. “The industry is not able to bridge the gap between demand and supply as the lengthy process of construction is further increased by the difficulty in obtaining permissions,” said Chintan Sheth, director, Sheth Corp.