Budget 2021-22 wishlist: Here are the key challenges in real estate sector

Key challenges
 

• Given the market / pandemic situation, there is an overall fall in the fair market values of properties. The reckoner values (circle rates) have pretty much remained at the pre-Covid levels.  Such a situation leads to tax being calculated on deemed income basis.  

• Pre-sales have reduced significantly due to lack of customer confidence on delays in project completion.  This has created liquidity issues with residential developers.   

Industry ask

• Real estate transactions (immovable property or shares of property companies) between non-related parties to be exempt from deemed income provisions [such as 56(2)(x) and 43CA].  The fall in market value due to the pandemic is much more than the safe harbour currently provided under these provisions.

• Reduction in stamp duties in some states led to significant increase in demand. To enhance the demand further across the country,  a long-term capital gains exemption could be provided on all under construction properties purchased during FY 2021 / 22.  With reduced stamp duties and no capital gains, it would be a great incentive for property buyers and would also boost the GST collection.  

• In view of the enhanced focus on the digital economy, there will be a need for high quality data centres.   Tax incentives for developers undertaking data centre projects would help in providing the initial boost to this niche asset class.