Pre Budget Expectations From Mr. Boman R.Irani, Chairman & Managing Director, Rustomjee Group
Revalidate Tax Structure to flat 5% for end user and 15% for developer
Currently customers are paying huge taxes when buying homes, if this is addressed there is going to be huge relief to the industry. In Maharashtra, as high as 35% of the value of the home goes towards tax. The same requires to be carefully revalidated to reduce the burden to the customer when we are moving towards GST regime. Tax to end users should be flat 5% including stamp duty, VAT and Service Tax. And cap all premiums and taxes including VAT, Service Tax payable by the developer to 15%.
Increase deductible on interest to Rs 3 lac and give 3% subvention on home loan to end user
Individual home buyer should be incentivized by increasing deductible on housing interest loan from Rs 2 lac to Rs 3 lac. This will definitely boost affordable segment home buyers. Another big incentive that may touch all segments of real estate buyers is giving subvention of 3% interest for 3 years.
Tax Breaks for the Industry for Affordable Housing
Real Estate Industry contributes 6% to GDP and no tax breaks are available to industry. But now to gear up for “Housing for All”, there is a need for tax break for the sector in affordable housing segment. Reintroduce incentive schemes like 80IA and 80IB for developers for affordable housing segment clearly defined definition of affordable housing which definitely varies from rural to Tier 3 cities to city like Mumbai where by Rs 50 lac should be affordable home.
Removal of Taxation on Annual Letting Value for Stock in Trade
In case of stock in trade, real estate developers are taxed as if those empty homes are let out. This Section 23 of Income Tax requires to be modified with effect to no tax on notional basis on stock in trade.
Denial of Tax Benefit to End User
Section 24 of the Income Tax Act requires to be modified and extend provision to 5 years from 3 years as on account of several delayed approvals most of the projects take more than 3 years to complete.
Status as Industry
Real Estate sector should be treated in par with Infrastructure as Real Estate players are key contributor to decongest the city center by adding more development in peripherals of the city .
