India Budget 2018
Affordable Housing segment
Affordable housing projects should be exempted from Minimum Alternate Tax (MAT) so that they become attractive thus fetching better investments.
The affordable housing project 80 IBA condition of 1st approval date be removed, many projects have amended approved plans as per PMAY eligibility.
Impact of ICDS/REIT
ICDS (Income Computation and Disclosure Standards) be prescribed for all real estate transactions to ensure better clarity, certainty and reduce possible litigation in future.
To promote compulsory listing of REIT/InvIT, suitable modifications should be made to allow a period of 12 months for REIT/InvIT units to qualify as long term capital asset in pace of three years.
Suitable amendments be made to provide exemption on interest earned by the HoldCo from the SPV, and further the SPV should be allowed to include LLP to ensure that REIT becomes more effective and more real estate players go for it.
Relief to individuals
To encourage home buyers to invest in real estate and boost the demand, interest for first self-occupied property should be allowed without any limit.
The deduction under section 80C should be allowed to individuals in respect of the cost of their first self-occupied property up to INR 5,000,000. The said deduction could be spread over a period of five years.
Deduction under section 80C for principal repayment of housing loan should be increased from existing limit of Rs 1, 50,000.
Expenditure on Realty projects
In view of real estate sector facing liquidity crunch, it is recommended that thin capitalization provisions should not be prescribed for the sector. Also grandfathering provisions should be introduced to enable merged/resulting entity to claim deduction of brought forward interest expenditure.
It is recommended that the section 43CA should be done away with real estate developers as guideline value is fixed by states to augment their revenue but many a times guideline value is higher than the market price.
Also provisions of section 50C (stamp duty) should be done away with as property prices are determined by various factors such as demand/supply/location, in-house amenities among others.
Mayur Shah is the Managing Director of Marathon Group and President of CREDAI-MCHI