The National Real Estate Development Council (Naredco) said the housing sector should get infrastructure status, which will help them avail tax benefits and easier flow of credit.
Ministry of Housing indicated that they are hopeful that this time focus will be on affordable housing.
Naredco also suggested that rental housing should be made more attractive to address the issue of shortage of houses.
The council suggested that the deduction from rental income under Section 24(a) of the Income Tax Act be increased from 30% to 50%. “This will promote rental housing. And for women and senior citizens, the deduction could be 100%, keeping social requirements and empowerment of women in view”, it said.
Brotin Banerjee, MD and CEO, Tata Housing said that he expected a raise in the income tax exemption limit to three lakh and a reduction in the excise duty rates to put higher disposable income at the hands of the public. He, in fact, also demanded that service tax be done away with in the housing sector.
“There should be no service tax for residential construction to motivate consumers to increase buying activity and revive demand”, he added.
Developers blamed the tight monetary policy of RBI for the slackening housing demand.
According to a Cushman and Wakefield report, there was a 16% drop in the residential market across major cities in India in 2012.
Realty players were cautious of launching projects as the gap between the launch and the absorption numbers reduced to 32,000 units in 2012 compared to 82,000 and 94,000 units in 2010 and 2011 respectively, reflecting weak demand, according to a Knight Frank report.
Consultancy firm, DTZ expected an extension of interest subvention scheme with enhanced limit on housing. “We hope Finance Minister relaxes norms pertaining to External Commercial Borrowing (ECB) for low cost housing”, said Anshul Jain, CEO, DTZ India. Government should look at development of Special Residential Zones (SRZs), added Jain.
Budget 2012-13 saw interest subvention scheme of 1% on housing loan up to Rs 15 lakh where the cost of the house does not exceed Rs 25 lakh for another year.
Then finance minister Pranab Mukherjee had also announced measures to address shortage in low income housing by allowing External Commercial Borrowing for low cost housing units and setting up of a Credit Guarantee Trust Fund to ensure better flow of institutional credit for housing loans.
Builders in the NCR region are currently looking more into ECB, which will carry on in 2013, said Raj Sharma, MD, Best property deals.
Housing Minister Ajay Maken in a recent interview to Business Standard had said that affordable housing should be granted infra status so they can get loans at affordable rates.
“Now affordable housing comes under commercial real estate. Once it’s a part of the infrastructure sector, four% of bank loans should be reserved as priority loans for affordable housing”, he had said.
Like for infrastructure projects, a delay of more than 6 months should not be considered as Non-Performing Assets, he had suggested.
