Government finally acknowledged that Real Estate was an important driver of the Indian economy. This sector supports over 200 types of small and medium size industries.There is a short fall in the number of units available in relation to the demand of housing in India. This gap cannot be met by Government alone and needs private participation.
I believe that the Finance Ministry should look at removing the multiple points of taxation and duties paid by customers in the purchase of an apartment. VAT and Service Tax need to be removed and a more progressive single point tax introduced, if required. In order to encourage investment in Real Estate, the total allowable relief under Section 80 C of Rs 1.5 Lakhs, as is prevalent now, should be increased to Rs. 2.00 Lakhs per annum.
The industry is moving towards ‘Green’ certification. Towards this Government can offer concessions on excise duties of cement if the building gets a certification from the authorised body. Already some banks offer a discount on the interest on housing loans for buildings with a ‘green’ certification.
Foreign Direct Investment caps should be restructured. The current entry levels are not practical. Also, if the three year cap on repatriation of investments into Real Estate should be relooked and brought down to two years, which is the average time for construction of a mid-size development. In order to remove unscrupulous elements Banks should be encouraged to lend to the Real Estate Industry by Government giving this sector Industry Status.
Koshy Varghese
koshy@vdb.co.in
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