Realty welcomes proposed housing tax exemption but….ye dil maange more-II
By: Ravi Sinha
Industry body NAREDCO admits that a lot is needed by the Finance Minister rather than just the tax exemption, which again was needed keeping in view the housing shortage which is one of the biggest challenge for the government of the day.
Justifying the demand for tax exemption Sunil Dahiya, Senior Vice President of NAREDCO says the deficit largely exists in affordable and low cost housing, which even PSU banks are skeptical to fund for various reasons and hence, capital markets can’t be expected to be extroverts looking at the PSU Bankers’ shying.
“The expectation from the budget should be to create an ‘international task force‘ under the Ministry of Housing & Poverty Alleviation’ as the nodal force that shall allow the realty sector to go overseas and raise such capital and allow any alternate capital raising instruments to ’innovate’ and to evolve per se the market demand. Housing units being short in the country with a deficit of 25million homes will cost approximately INR 1lac Crore. With the requirement spiralling at an average of 5% p.a of the same deficit, the government needs to create a framework to raise that kind of national wealth to cater to the demand of this social infrastructure,” he says.
Brotin Banerjee, MD and CEO of Tata Housing believes the initiatives like lowering & standardization of stamp duty across the country as well as reducing transaction burden could benefit the developers as well the end consumers would be. He believes the introduction of unified taxation system across all states will also help to incentivize more consumers for home ownership. Advocating for a regulator to create level-playing field in the realty sector, Banerjee, however, demands special concessions for integrated townships as it is the way forward for Indian developers and it immensely helps to reduce the pressure on city infrastructure.
“The appeal of integrated townships lies in the fact that it puts affordability, convenience, and focus on lifestyle in one very attractive package. Also in order to meet the demand and need for facilitating MIG/LIG housing, and thereby the requirement of decongestion of cities, there is a need to extend tax holiday under section 80IB for Integrated Township development project as Infrastructure project (development of township project with over 20 acres of land out of city limits with development of at least 50% of the FSI area as Affordable housing with area less than 950 Sq Ft). This section gives tax relief to the builders for construction of integrated townships and thereby contributing to development of infrastructure around the metros and tier 1 cities, thus reducing the demand and supply gap for affordable housing,” Banerjee says.