Developers seek infra status for real estate

Hyderabad: Real estate developers in Hyderabad are worried over delay in the announcement of special economic stimulus package for the key sector to tide over Covid-19 crisis even as they seek infrastructure status that will make the sector eligible for priority sector lending, thus reducing interest burden on it.

"Real estate sector generates largest number of jobs and employment opportunities after agriculture in the country. But it is very disappointing to see that the Centre has not announced any special revival package for the sector till now. We expected something for the sector in the first tranche of package announced by the Finance Minister," said Gummi Ram Reddy, Chairman, the Telangana chapter of Confederation of Real Estate Developers' Associations of India (Credai).

Pointing out that Centre's announcement of six-month extension of RERA-approved projects and one-year extension of CLSS (credit linked subsidy scheme) would not benefit the sector much, Reddy told The Hans India that the central government should reduce interest rates on home loans by two to three per cent to incentivise those who buy new homes during Covid-19 crisis. "Such a move will increase sales. Governments will get more revenue if realty sales go up as taxes account for 40 per cent of a residential unit's cost," he said.

He also sought the re-introduction of input tax credit (ITC) on GST and cut in GST rate on cement which attracts a whopping 28 per cent GST. "The Centre should also extend all the benefits announced to MSME sector, to real estate sector too. No one is prepared to handle a crisis like Covid-19 and then carry on business operations by paying salaries and clearing other bills. The sector now needs immediate financial support in the form of collateral-free loans and other support," he stated.

B Sunil Chandra Reddy, Secretary General, Telangana Real Estate Developers Association (Treda), underlined the need for according infrastructure status to real estate sector.

"We are expecting the central government to immediately announce infrastructure status for real estate whenever it comes out with a special package for the key sector. If real estate gets infrastructure status, it will be eligible for priority sector lending, which will reduce interest burden on realty projects. Furthermore, banks will come forward to lend more to the sector," he said.

Treda is also seeking 50 per cent reduction in GST on commercial and residential properties including affordable housing. "Cut in GST will definitely boost sentiment and sales in real estate, leading to sector's faster recovery," he said. At present, affordable housing units attract one per cent GST while it's five per cent on other residential units. Commercial realty attracts 12 per cent GST with ITC facility.

Reddy also said that a 50 per cent cut in property registration charges and stamp duty for one year, would also give a big boost to the sector. Treda submitted a memorandum to Telangana Finance Minister T Harish Rao, seeking cut in GST and registration charges. "As Finance Minister Harish Rao is a member of GST Council, we took the issue to his notice. Besides, property registration charges and stamp duty are in the State government's purview," he pointed out.