Industry status sought for real estate

Visakhapatnam: RATTLED by the prolonged spell of Covid-19, burgeoning cost of land prices and difficulty in accessing institutional finance, the real estate sector has upped the ante for grant of industry status in the Union Budget for 2022-23.

The sector, which is set to contribute significantly to making India a $5 trillion economy by 2004-25, is the second largest employment generator after agriculture. It is also expected to become a $1 trillion market by 2030.

For revival of the demand and market penetration, the realty developers seek increase in the rental income limit for TDS, extension of NBFC credit liquidity and single window clearances for project approvals.

B Srinivasa Rao, Chairman, Visakhapatnam chapter, Confederation of Real Estate Developers Associations of India (Credai) told Bizz Buzz that the slew of incentives to ensure market sentiments and more investments in housing will help trigger a cascading effect in the form of revenue contribution and generation of more employment opportunities in the field of construction.

He said Credai, the apex body for real estate developers in India, is trying to impress upon the government on the need to extend certain incentives to the realty sector to carry on their activities.

In fact, the ruling BJP had already sought inputs from realty bodies for consideration as part of budget preparation exercise. "Accordingly, we have given inputs, mentioning the issues to be considered for incorporation in the Union Budget," he stated.

Credai also wants reduction in housing loan interest to bring more people to investments in housing on the lines of interest charged overseas. It also points out their concern over GST. "We requested for reintroduction of GST with input tax credit for under construction projects. This will result in reduced cost of construction, leading to slashing down of prices and increasing demand from the potential buyers".

Cement is the most important input in the construction sector and Credai represented a reduction of GST on this from the present 28 per cent to 12 per cent. Rao said they also wanted a uniform rate 12 per cent GST for all products and stamp duty for registration should be brought under the purview of GST. Revising tax exemption for individuals will put more purchasing power in their hands and enhance the demand for houses.

Another important change the realty sector wants is the stipulation that 80 per cent of the materials used should be purchased from GST registered agencies. It acts as disincentive to small and medium scale builders, who spend more than 40 per cent on labourers. This stipulation should be brought down to at least 50 per cent.

Another critical issue they have represented is with regard to affordability. Increase of tax holiday to developers and funding stalled projects will greatly boost the demand for houses. Removal of Rs 45 lakh cap and extension of 1 per cent GST are other issues that will have a positive impact on the affordable housing sector.

Rao said input tax credit will help them a lot avoiding multi-point taxation. It should be reintroduced. Once the cap on GST is put at 12 per cent, stamp duty should also be brought under GST. Cap on GST beneficial to the sector as a whole in bringing down the cost as at present 28 per cent GST is charged on cement, a key material for the construction sector.