Comments
An analysis of the last few budgets proves that the > real estate sector has been left almost untouched with no announcements directly benefiting the sector.
Post introduction of Negative List regime, ambiguity has arisen regarding exact service tax implications on various charges recovered by developers.
TROUBLED WATERS
Developers and investors are wading in troubled waters due to reduced demand, liquidity crunch and delayed projects, says Sherry Samuel Oommen, founder and senior partner, GyanMagnus Associates.
There is a possibility that the rate of >minimum alternate tax (MAT) could stand increased from 18.5 per cent to 20 per cent in the new budget.
While the enhancement in rate to 20 per cent could be justifiable, imposition of MAT on gross assets would clearly be retrograde, Oommen said.
Greater clarity on the roadmap for implementation of Goods and Services Tax would be critical for the sector, he told Business Line.
Section 35AD of the Income-tax Act, 1961 provides a 100 per cent deduction of capital expenditure in the first year of business set up for certain specified businesses, which includes affordable housing.
Currently this deduction does not benefit developers, since business of developing housing project does not involve capital expenditure.
This is so because construction and land are stock in trade and not a capital asset. Thus, relooking at the incentive for affordable housing becomes critical.
On a different plane, cascading effect of stamp duty has been a major reason for non-registration of deals and for alternate conveyance options.
STAMP DUTY
Introduction of uniform stamp duty rates and stamp duty credit will reduce costs for ultimate buyers and foster transparent deals. It would be indeed welcome if the State Government could introduce the same in the ensuing State Budget, Oommen said.
While introducing the negative list of services, those provided for construction of single residential units were exempted, making every other residential construction taxable. The exemption was granted without taking into consideration the ground realities, Oommen said.
Most middle income or lower income families construct houses as two residential units with intention of giving on rent one of the residential units.
Consequently the service in relation to this gets taxed. But the high income group would never have two residential units and consequently this goes untaxed. This anomaly should be rectified, Oommen added.
vinson.kurian@thehindu.co.in
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.