The Government of India in the past one year has announced a number of reformative measures to boost the real estate market and make it more transparent for transactions. However, to strengthen the hands of consumers and boost sales, government should bring some specific provisions and clarify its stand on the following:
Provide more tax incentives to homebuyers
While first time homebuyers should be incentivised with more tax incentives for securing loans, the government should increase the tax deduction limit for housing loans. The current limit of Rs 2 lakh is insignificant, given the ticket sizes in cities such as Delhi and Mumbai, where premium properties or three-bedroom apartments come over Rs 50 lakh and above. Additionally, the government should give more room across each tax slabs to help the end users. Any effort in this direction will help the government to achieve its housing for all target by 2022.
Provide clarity on provisions of Pradhan Mantri Awas Yojana
Government had recently announced that interest rates of 3% would be applicable on loans of up to Rs 12 lakh and 4% on loans of up to Rs 9 lakh, under the Pradhan Mantri Awas Yojana (PMAY). With this, two new income categories can avail higher loans with interest subsidies. The Budget should give more clarity on the actual definition of beneficiaries who can avail of these benefits.
SOPs for the industry
Granting infrastructure status to housing and commercial projects will attract large companies and most importantly inculcate corporate governance in the otherwise fragmented sector. For the sake of convenience and uniformity in law, the ‘built up area’ in the Income Tax Act should be replaced by the term ‘carpet area’ introduced under Real Estate (Regulation and Development) Act (RERA).
Above measures will not just take the market towards growth but will help in an inclusive growth.
The author, Gaurav Jain is Managing Director & CEO, Jindal Realty Pvt. Ltd.