To ensure success of newly created REIT (Real Estate Investment Trust) structure, the property developers and consultants have sought more tax incentives in the upcoming union budget on investments through this route. The positive moves taken by the government last year like the principal approval to REITS by SEBI would give cash strapped investors, High Net Worth individuals and other investors easy access to funds and create new avenues for real estate developers. Going forward, the sector want infrastructure status for real estate apart from that there should be exemption from the tax and less formalities to obtain home loans for the buyers. Giving this status to the real estate industry will attract huge foreign direct investments into the sector giving developers a major reprieve due to want of funding options available in the country. This will result in faster completion of projects thereby reducing cost of project resulting in property prices offered at reduced cost to home buyers.
Currently, real estate is reeling under slump and the government should consider the point of view of developers and buyers both. There is need to take action control interest rate and single window system as well. List of priorities that need immediate attention for development of the real estate sector in the country
- Giving infrastructure status to the real estate industry
- Bringing down interest rates on housing loans
- Removing or at least reducing service tax substantially
- Income tax exemption for affordable homes built for EWS and LIG
- Borrowing for construction companies to be available at lower interest rates
Meanwhile, if the government initiates steps towards providing special benefits to green and sustainable developments, it will have a profound positive impact as it is the future of real estate industry. This coupled with single window clearance system will help in reducing time for project completion, thereby bringing down the overall cost of construction.
The sector has also demanded that the deduction available under Section 24 to a maximum limit of Rs 2,00,000 for interest on loan taken for acquisition/ construction of self-occupied house property should be harmonized with the rising interest rates and increased to at least Rs 3,00,000 per annum. Also, the deduction for principal repayment of housing loan under Section 80C of the Act should be either increased from the existing limit of Rs 1,00,000 or the principal repayments considered for a separate/standalone tax exemption (rather been clubbed under Section 80C of the Act).
The sector has also requested that Integrated township development projects be brought within the definition of infrastructure or at least various facilities such as roads, water supply system etc. created after obtaining Government approvals be considered as infrastructure facility for the purpose of Section 80-IA of the Act and deduction under Section 80-IA of the Act be granted to the developers in respect of such infrastructure development.