Realtors want tax holiday to stay, sops for buyers

The Confederation of Real Estate Developers' Associations of India (Credai) has sought extension of tax holiday to industry parks up to March 2015 and amendments to help townships of 10 acres and above to qualify for tax deduction under infrastructure facility.

This is in addition to tax sops for first-time homebuyers from 2011, besides enhanced income-tax deduction limits.

The New Industrial Park Scheme 2008 was notified. However, for 2006-08 there was no notification under the automatic route of approval, and the minimum number of industrial units was 30. Credai has sought extension of the limit, including clearing all pending applications under the original scheme (2002) with no restrictions on the units.

The association says because of increased IT activity, companies in the service sector should be given incentives in view of IT's potential to create jobs.

On the tax holiday sought for housing projects under 80IB (10), the association feels that more time is needed to make affordable housing a reality. Extension of tax holiday (80IA) to townships will help meet the shortage.

Credai has also requested an amendment to facilitate Cenvat credit for inputs to contractors under the composition scheme, in line with input services and capital goods. Lack of such credit increases the project cost.

In the notified-service category of commercial and industrial construction service and construction of complex service, Credai has said the stervice tax abatement should be increased from 75 per cent to 90 per cent.

SOPS FOR HOME-BUYERS

For the first-time buyer, the association has sought deductions to be capped at Rs 5 lakh or computed at 10 per cent of the home cost at Rs 50 lakh for Mumbai, Rs 30 lakh for Delhi, Bangalore, Chennai, Hyderabad and Kolkata, and Rs 20 lakh for other cities. It should be spread over 10 years.

In addition to the present principal repayment deduction of Rs 1 lakh, a separate limit of Rs 2 lakh has been sought. The limit on interest repayment should be raised to Rs 2.5 lakh from the Rs 1.5 lakh.

On affordable housing, Mr Brotin Banerjee, chief executive and Managing Director, Tata Housing, said the cap on housing loans at subsidised rates should be increased to Rs 30 lakh in addition to interest rate reduction, given the rising property prices.

A single-window clearance should come for approvals to ensure speedy delivery.

Mr Sarang Wadhawan, Managing Director, Housing Development and Infrastructure, wants service tax abolished for affordable housing of less than Rs 50 lakh in metro cities and complete exemption in non-metro cities.

He said an urban-infrastructure fund should be created for affordable housing, slum rehabilitation and redevelopment projects.

Mr Wadhawan also sought classification of slum rehabilitation and redevelopment of old buildings as urban infrastructure for purpose of external commercial borrowings.

Mr Abhisheck Lodha, Managing Director, Lodha Developers, said the Budget should offer an additional thrust to infrastructure development and streamline regulation.

Mr Anuj Puri, Chairman and Country Head, Jones Lang LaSalle India, said there was a need to simplify tax for real estate, introduce goods and services tax, and bring the sector under the single tax. This will reduce transaction costs (which currently include stamp duty), and give developers a set-off or credit on the taxes paid on construction material and services, he said.

Mr Puri also wanted a real-estate regulator to be set up to bring in more transparency.

COMMENT NOW