Worst for real estate over: Kabul Chawla

Fiscal incentives provided by the government for the development of the housing and real estate sector in successive budget along with the liberal investment and reforms and policies has brought the real estate sector to the centre stage.

Real estate sector in the past has witnessed unprecedented slowdown due to the ongoing global financial crisis. But due to the government's timely initiatives by providing liquidity in the system through stimulus packages announced last year, the worst seems to be over and market is stabilized after the correction.

We hope Finance Bill 2010 is expected to give a further boost to the real estate sector.

Tax Holidays

Firstly, we expect tax holidays for housing projects under Sections 80-IA and 80-IB, infrastructure status for integrated township projects and bring down the cost of funds.

Restructuring of Developer's Debt

Restructuring of existing debt of developer till March 2011.

Section 80 C

It is suggested that the limit of Rs. 1 lakhs u/s 80C be increased to Rs 2 Lakhs and Rs 1 Lakhs out of it exclusively reserved for payment of principal borrowed for the purchase of a residential house. This will help in boosting the housing.

Incentives for promoting rental housing

Tax on rental Income

Income from renting of properties is taxed at a flat rate of 10%.

High cost of houses and high property taxes lead to a low rate of return from the rental housing making renting out an un-remunerative proposition. It is suggested deduction from rental income under section 24 be increased from 30% to 50%. This will promote rental housing.

Funds for affordable housing

The government should dedicate a affordable housing Fund in line with infrastructure fund exclusively for the construction of LIG/EWS and lend it to the developers.

Most important thing that we expect the government to do for the real estate sector is exemption from Section 56(2) of the Act relating to payment of stamp duty. The apartment purchase agreements are signed even before the construction commences. But the conveyance is done after project completion which could be 3-4 years down the line when value could be higher. The difference in value of stamp duty and the purchase price is booked as income in the hands of the buyers. Another concession relates to deduction for principal repayment of housing loans under.