People from all walks of life are getting restless as the budget announcement date is approaching nearer. The entrepreneurs are eyeing the declaration to plan in new strategies for the betterment of their businesses. The common man is eagerly waiting to finally figure if this time it is going to finally be ‘good times’ ahead. Like every year, ‘affordability’ factor tops all charts for the re-kindling of India with good times.

Real estate, as an industry is a large contributor to the GDP and also supports almost 250 subordinating sectors like, ceramics, fittings and fixtures, electric and electrical equipments, cement, labor etc. Always having this huge potential, if given a little fillip, real estate would play an important role in propelling GDP and would help it reach magic figure of 9% in next two-three years.

Due to the great disparity  in  the tax  treatment  of works contracts across various states  under  respective  VAT  laws, the  government  is expected to hasten the implementation of the Goods and Services Tax (GST). At present the services part is covered by a central statute while the goods segment is covered by state statues, which is leading to situations where total taxable value of goods and services portion of the contract is exceeding the actual value of the contract. “GST will ensure a uniform treatment of goods and services forming part of composite agreements of works of contractors and developers. This will not only help the industry but will lead to lower price for the customers,” said the spokesperson of Emaar MGF.

Though most of the policy frameworks in real estate sector come under state government’s purview, there are still many fiscal and monetary stimuli the Union Government can award to this sector to give a boost.There are primarily three concerns which need serious attention in the budget.First is bringing real estate into infrastructure ambit. This will ensure application of infrastructure policies to this sector as well and will directly benefit the sector in terms of availability of funds.

Secondly, government should extend home loan principal repayment exemption limit from Rs 1 lakh to minimum of Rs 3 Lakh from taxable income under Section 80C/80CCC/80CCD. This is an immediate requirement which will benefit home buyers’ pockets and in turn will boost sales. Also, currently there is an income tax benefit of Rs. 1.50 Lakhs per person for the amount paid towards interest component of a Home Loan. Emaar MGF spokesperson also said, “This benefit was introduced in year 2001 and in last 13 years property prices have moved up two to three times. Government, therefore, should extend this limit to a minimum limit of Rs 3 Lakhs.”

The third angle government must attend to, is the policy framework for REITs. REITs have been long awaited by India’s real estate industry, as India moves in to a high GDP growth it will require supporting infrastructure of commercial, and office space to create. He also added, “REITS is one of the best and transparent ways to fund this growth, with both Domestic and International investors keen to invest in to a high growth economy. Government must bring in the necessary legislations and guidelines to enable roll out of REITs, this has the potential to boost not only Real Estate sector but also the upstream sectors like cement and steel and create large scale employment across various skill levels.” Emaar MGF also added, the Government has also given concession in the TDS applicable on interest remitted to Foreign Institutional Investors or Qualified Foreign Investors. This rate of interest for availing concessional rate of TDS is presently linked to the prime lending rate hence the benefit is not applicable to all such instrument holders. If this rate is made free of any minimal interest rate requirements, then it would help bring in much needed foreign cash-flows into real estate as well as other industries of the country.