Visakhapatnam: Reeling from the prolonged period of Covid-19, soaring land prices and difficulty in accessing institutional funding, the real estate sector has upped the ante for granting industry status in the Union budget for 2022-23.
The sector, which is expected to contribute significantly to making India a $5 trillion economy by 2004-25, is the second largest job generator after agriculture. It is also expected to become a $1 trillion market by 2030.
To boost demand and market penetration, property developers are calling for an increase in the rental income cap for TDS, an extension of NBFC credit liquidity and one-stop-shop permissions for project approvals.
B Srinivasa Rao, Chairman of Visakhapatnam Chapter, Confederation of Real Estate Developers Associations of India (Credai), told Bizz Buzz that the multitude of incentives aimed at securing market sentiment and more investment in the Housing will help trigger a cascading effect in the form of contributing to incomes and creating more construction employment opportunities.
He said that Credai, the apex body for real estate developers in India, is trying to impress upon the government the need to extend some incentives to the real estate sector to keep it going.
In fact, the ruling BJP had already solicited contributions from the property bodies for consideration as part of the budget preparation exercise. “As a result, we have made contributions, mentioning the issues to be taken into account for incorporation into the Union budget,” he said.
Credai also wants an interest reduction on home loans to get more people to invest in housing on the lines of interest charged abroad. He also highlights their concern about the GST. “We have requested the reintroduction of the GST with an input tax credit for projects under construction. This will result in reduced construction costs, leading to lower prices and increased demand from potential buyers.”
Cement is the single most important input in the construction industry and Credai accounted for a reduction in GST on this product from the current 28% to 12%. Rao said they also want a flat rate of 12% GST for all products, and stamp duty for registration to be subject to GST. The revision of the tax exemption for individuals will give them more purchasing power and strengthen the demand for housing.
Another significant change that the real estate industry wants is the stipulation that 80% of the materials used must be purchased from GST-registered agencies. It has a chilling effect on small and medium builders, who spend more than 40% on labour. This stipulation should be reduced to at least 50 percent.
Another crucial issue they have represented is that of affordability. The increase in the tax exemption for developers and the financing of blocked projects will significantly stimulate the demand for houses. Removal of the Rs 45 lakh cap and extension of 1% GST are other issues that will positively impact the affordable housing sector.
Rao said the input tax credit would help them a lot to avoid multi-point taxation. It should be reintroduced. Once the GST cap is set at 12%, stamp duty should also be subject to GST. Capping the GST benefits the entire industry by reducing costs as currently a 28% GST is levied on cement, a key material for the construction industry.