Thursday, February 25, 2010

Mr. Brotin Banerjee, CEO and MD, Tata Housing Development Company Limited

With the launch of affordable housing and improved liquidity scenario, the Indian real estate sector is looking optimistic after going through a rough patch since 2008. While Indian real estate may be geared up for better times in 2010, the liquidity crunch witnessed in 2008-09 has led to a situation wherein there is a need for easing of lending norms for the sector. Given recent controversies surrounding FDI in the sector, clear policy statement on FDI participation is a necessity.

We believe that the government needs to adopt a multifold strategy for revival in the real estate sector. The following would be our expectations from the union budget:

On the consumer front

Subsidize Stamp duty and registration
· The Government should initiate schemes to subsidize stamp duty and registration fees for the end consumers.

Taxable Income Slabs
· With salaried class being the most consistent tax payers in India as they are subject to TDS, last year’s budget provided only a marginal relief to the salaried class with just a Rs.10,000 hike in the limit for taxable income. The wish is to increase the minimum taxable tax slab to Rs.2.50 lakhs (for men). The next slabs can be at Rs.10 lakhs for 20% tax rate and 30% for income greater then 25 lakhs. Since the Fringe Benefit is now taxable in the hands of the salaried person, not raising the slabs significantly will increase the tax burden for salaried people.

Tax Exempt Investments
· The limit for tax exempt investments under Section 80C is continuing at the archaic Rs.1 lakh has to be increased. This will help those who have the potential to invest. This will also help the housing industry as currently people are not able to derive the full benefits for the principal portion of the housing loan repayment.



Availability of finance for people at the Bottom of the pyramid
· There is a lack of financing for the people working in the unorganized sector, this can be an another thrust area and the government should look at creating options to provide access to cheap and easily accessible financing options in terms of Housing loans, especially for the consumers at the bottom of the pyramid. There is limited or no organized funding for this segment as of now
· The government must ensure to strengthen the National Housing Bank and must encourage Micro Housing Finance Agencies to provide credit to the low income group
· Tax benefits for the home loan to be increased

On the Developer front

The Government must incentives developers by waiving off development charges and by focusing on stamp duty and registration for land.
The budget should also explore the Public Private Partnership (PPP) format which should be scaled up rapidly.
Provide infrastructure subsidies for building affordable housing and Incentives on the tax front could be in the form of introduction of tax benefits for development of affordable / low cost houses townships.
The developers should get infrastructure subsidies on developing townships as it leads to an overall infrastructure development leading to an increased cost for the developer

Increase focus on green development
The real estate sector contributes to more than 5% of global carbon emissions across the globe and subsides for green projects can lead to an increase in the green projects the budget should look at providing incentives to both consumers buying properties in green and developers focusing on green development.


Relaxation of ECB regulations
External Commercial Borrowing (ECB) is allowed for development of townships and further extension of this will serve the cause of increasing the housing stock in the country. The cost of borrowed funds for the developers is high and the availability of long term loan is also not easy. Therefore, it will serve as a great incentive to increase the access to overseas funds at lower cost through the ECB

Mr. Brotin Banerjee, CEO and MD, Tata Housing Development Company Limited

No comments:

Post a Comment