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Budget Wishlist |Making ‘Shelter for all’ a reality: Parsvnath

Budget Wishlist |Making ‘Shelter for all’ a reality: Parsvnath
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First Published: Tue, Feb 19 2008. 05 02 PM IST

Pradeep Jain, chairman, Parsvnath Developers Ltd and president, CREDAI
Pradeep Jain, chairman, Parsvnath Developers Ltd and president, CREDAI
Updated: Tue, Feb 19 2008. 05 02 PM IST
New Delhi: The economy is expecting a growth rate of 9% and real estate will continue to accelerate this growth by providing desired impetus, inspite of the taxation and levies that are presently clamped on this sector.
Pradeep Jain, chairman, Parsvnath Developers Ltd and president, CREDAI
However, any further tax burden will affect its orderly growth and development. The government must support in providing feasible tax regimes that are in line with the growth of the sector.
Key Recommendations
*Real estate projects should be covered under Section 81A as it helps create an Infrastructure Facility. This may be defined with projects like group housings and integrated townships including infrastructure facilities like roads, water supply, sanitation, sewerage, community centres etc. Therefore a deduction equal to 100% from profits and gains derived from such businesses should be allowed for a minimum of ten consecutive financial years
* Industry status should be accorded for preferential financing by banks and other financial organizations. Presently RBI discourages the banking system from making construction finance available to developers. In the absence of debt from the banking system, developers have to depend upon private sources of funding which pushes up the cost to the detriment of ultimate buyers
* Restoration of 81B to generate interest of developers to provide Lower Income Group (LIG) & Economically Weaker Section (EWS) housing with a rider for area not exceeding 1500 sqft in non metro areas and 1000 sqft in metros
* Service tax on renting commercial building ends up creating confusion and causing disturbance which can be minimized by a withdrawal of this tax burden
* Extend the concept of Special Economic Zone (SEZ) from industry to housing and urban infrastructure like Special Residential Zone (SRZ) where SRZ is a notified geographical region that is free of domestic taxes, levies and duties with special development rules to promote large scale Greenfield affordable housing projects for the country’s masses
*12.5% Service Tax on residential construction was included in Finance Bill 2006, when government provided all incentives to boost housing, proving to be a deterrent. This combined with rise in excise duty on cement and steel would raise the unit cost by about 4 - 5%, thereby, reducing impact of tax incentives. Residential construction, therefore, should be taken out of service tax net
* Rationalization of stamp duty is a long pending demand of developers and consumers and the same should be reduced to a range of 2-5%. This will generate more revenue for state governments by increasing transactions and help in reducing cost of securitization of housing loans
*REITs to be encouraged and necessary guidelines finalized at the earliest. These together will boost supply of fund to housing and real estate sector and enable equity participants reap the fruits of high yielding real estate sector
*Expectations for general housing: With the government’s objective of ‘Shelter for All’ incentives are sought to boost rental housing. Some of the options are:
- Deduction from income of house property to be increased from 30% to 50%
- Deduction of 100% to be considered in case of houses owned by women and senior citizens
- Depreciation allowance of 50% be allowed on investment made by employers in employee housing
- Interest rates on housing loans to be made softer
Pradeep Jain is chairman, Parsvnath Developers Ltd and president, Confederation of Real Estate Developers Associations of India (CREDAI)
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First Published: Tue, Feb 19 2008. 05 02 PM IST
More Topics: Parsvnath | shelter | SEZ | housing | real estate |