ND Developers: Real Estate and Budget 2016-17

As the Lok Sabha takes up 2016-17 budget sessions, the real estate industry has started building castles in the air. The realty industry is hoping that the Union Budget 2016-17 remains positive for this sector. Due to a long-existing downfall in the realty market, experts are having high expectations from the government.

Dividend Distribution tax (DDT) has continued to be a major barrier in REITs; industry hopes to part with it. ND Developers states that elimination of dividend distribution tax in real estate investment trusts (REITs) is a foremost demand from the realtors. Regardless of the announcement, last year, till date not even a single REIT listing has taken place in India because of Tax leakage. The government should focus on tax breaks and additional incentives to boost sales, which is the main crisis today. The tax deduction limit for home loans, especially for buyers in urban cities should be increased. The government should control and stabilize prices of raw materials as taxes cost around 9-10% and they have a direct impact on the ultimate price of the product.

Finance Minister must support the realty dealers by awarding infrastructure status to the housing sector and also incorporate lending to affordable housing in priority sector lending which will overthrow cost of financing such projects. To make affordable housing striking for developers, tax holiday under section 80 IB for affordable housing projects ought to be reinstituted and minimize tax on inventory under section 43 CA.

At present, industry’s expectation is the decline in interest rates and property prices from buyer’s viewpoint. The government can launch special residential sectors on the line of economic zones for projects where houses are of a particular size or price. The expectations are that the Finance Minister accepts the cutback of Corporate Income Tax as assured in the last budget.