The announcement of Union Budget 2016-17 is eagerly awaited and the real estate stakeholders in every Indian city are looking forward to see whether the upcoming Union Budget will provide any relief to the realty sector. The previous two Union Budgets saw the government, in a bid to boost investment and economic growth, offer incentives to businesses.
The highlights of last year’s budget were 100% reduction for contribution to Clean Ganga projects and Swachh Bharat, hike in service tax rate from 12.36% to 14% and incentivised use of debit, credit cards.
Here are the expectations of Real Estate Sector from Union Budget 2016-17
Implement Real Estate Regulatory Bill (RERA)
Implementation of Real Estate Regulatory Bill will bring in the much needed transparency in the realty sector. This will bring confidence in home buyers to return the market and deal with trustworthy builders.
Removal Of Multiple Taxes
At present, many indirect taxes involved in the purchase of residential property in India. Home buyers are required to pay Service Tax and value-added tax (VAT) on the top of registration charges and stamp duty. Service Tax is levied by the Central Government on the construction services offered by the developers to buyers. VAT is levied on the sale of goods (movable properties).
Goods and Service Tax (GST) should be introduced in the place of these indirect taxes. Approval of Goods and Service Tax Bill will lower down construction costs, avoid multiplication of taxes and help in substituting many taxes with a single tax thereby ruling out the confusion in buyers.
Reduction In Property Registration Cost
The another main expectation from the Union Budget 2016-17 is a reduction in property registration cost. In most cases, stamp duty and registration costs are as high as 6% and this needs to be cut down by a few basis points to aid customers. Alternatively, a slab-based approach should be introduced.
Interest On Home Loans
The whole sector is at least expecting the rates to come down so as to revive the market. Interest rate on home loans needs to be reduced between 7.5%-8%. Also, the home loan interest amount benefit under Income Tax exemption should be increased.
Reduction in Service Tax
The government increased the service tax rate from 12.36 to 14 per cent w.e.f June 2015. Changes in Service Tax directly impacts the annual expenses incurred by middle class households.
Single Window Clearance
The need of a single window clearance system has been long advocated. At present, construction delays have plagued the realty sector because a number of approvals are required from civic and government authorities. Obtaining numerous approvals and permission is a long process and increases the cost for developers and buyers. The implementation of Single Window Clearance will make the whole project cycle simple.
Tax concessions on house insurance premium should be introduced to inspire end users.
Will the expectations turn into reality? Let’s wait and watch!
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