Tax Incentives and Budget Reforms can Boost Real Estate Industry

Q: Do you think that budget reforms can boost the realty market? What are the initiative that government should take? Your opinion is highly appreciable.

Puneet Laskar,

11th February 2015

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Replies (14)

Hi Everybody,
Let's finger crossed and hope for the best for all sector. Primarily, the Budget will see the government's important projects, including the Smart Cities project, getting much support, including upcoming special economic zones to see reduced alternate tax and dividend distribution taxes. The government may also rationalize duties and set the differential MAT rate at (5-10)%. The government is also expected to give incentives to banks that are losing money over zero-account bank schemes.

Kamal Shekhawat, Ahmedabad

28th February 2015

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@Saran,
But what i think is the most important takeaway from the budget could be tax rate cuts and rebates, in order to boost middle income spending and to relieve the burden on the salaried class with high-income groups being expected to bear burdens. The heritage tax is also expected to make a comeback. It was scrapped in 1985 but the estate tax has been on the finance ministry’s radar for some time now. T

Joseph Sebastian, Kolkata

27th February 2015

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@Ashok,
There are also hopes for deduction in mediclaim insurance premiums to be increased to Rs.50000 from Rs.35000. There are also discussions about the Tax Administration Reform Commission or TARC, to make tax matters more flexible and less complicated. With regard to TDS, the recently instated Standard Operating Procedures aim to give tax authorities more options to handle TDS problems quickly.

Saran,

27th February 2015

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Some of the most important expectations include increase in the tax exemption limit, which currently stands at 2.5 lakhs and if increased, could trigger positive spending trends in spending power and the flow of money in the economy. Also, there are expectations to broaden the tax base of net wealth, which is currently at 1% if the net wealth is more than 30 lakhs.

Ashok Sharma, Hyderabad

26th February 2015

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The corporation tax rate, including cess and surcharge, stood constant at 33% for the last 7 yrs., although the surcharge has been changed on and off, with a reduction by 5% in 2014. It is clear that the Indian tax payer is looking for some major relief from the Budget.

For the Indian tax payer, expectations come in the form of tax cuts, deductions, relief and less complicated tax structures to navigate.

Pranab Malakar,

25th February 2015

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@Pranab,
What you explain above is right but at the other hand it seems to me that the tax structure would need to go a long way to encourage companies to invest in India. The Government is faced with a fiscal deficit target of 4.1% predicted for the coming fiscal year.

Saran,

23rd February 2015

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Hi everybody,
The upcoming budget has many expectations riding on its announcements, especially with reference to tax reliefs for companies and individuals. The key points in the 2015-16 budget are expected to be affordable housing, tax benefits and provisions to the common people. Focus will be on encouraging savings and improving the spending power of common man.

Saran,

23rd February 2015

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Hi That,
I think government has heard your voice and in your demand and in his earlier speech Finance Ministry have stated that revision of tax slabs for individuals and companies will definitely be announced in the upcoming budget, with the hope of discouraging companies from moving to more tax-conducive countries. This is because the government’s Make in India policy is supposed to start the investment cycle and refocus investments on India instead of other countries, with a particular focus on manufacturing and housing sectors.

Pranab Malakar,

23rd February 2015

In spite of the fact that 100% FDI in construction via automatic route is laudable, Real Estate Investment Trusts may not succeed wholly if distribution of profits by Special Purpose Vehicle is subject to Dividend Distribution Tax. Accordingly, DDT should be scrapped on distribution of dividends by SPV to REITs.
At last, GST should be implemented at the earliest, since this will trigger cascading benefits for real estate and other industries across India.

Lokesh Patwa,

13th February 2015

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Moreover, the ceiling under tax benefits for home loan repayments is capped at Rs100000 for principal paid, which is low, especially when home loan repayments are clubbed with other tax-saving instruments. The existing limit can either be hiked or principal repayments considered as a standalone tax exemption, distinct from other tax-saving tools.

Diwakar Shetty,

12th February 2015

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At the same time, reforms in the Land Acquisition Act, additional land holdings should be made available to developers, which will control rising land costs. The Governments vision of Housing for All by 2022 and the creation of 100 Smart Cities may then became a ground reality within the official deadlines.

Lokesh Patwa,

11th February 2015

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Yes,
There are so many benefits of integrated township as it will develop numerous facilities such as roads, water supply, sewage systems, sanitation, electrification, landscaping, horticulture and other civic services, etc. Infrastructure approval could be granted with the rider that these facilities/services would ultimately be handed over to the respective State Governments/Local Bodies, being akin to Built, Operate & Transfer projects.

Diwakar Shetty,

11th February 2015

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And i am very much sure that this single reform could completely transform real estate in India. Moreover, infrastructure status should be match up with to the sector so that the funds can be accessed easily on friendly terms. If infrastructure status for the industry is not possible, such a status can be delivered on integrated townships, which need developing residential, institutional, educational, medical, commercial and community buildings, etc.

Lokesh Patwa,

11th February 2015

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Yes Lokesh,
And the biggest sign will be a drop in interest rates and higher tax incentives on the interest component of realty loans. And customers are looking for that. With inflation moderating sharply in recent months, the RBI can progressively lower interest rates. This will encourage fence-sitting customers to finally purchase their dream homes. To clear project difficulty and upgrade timely deliveries, single-window clearance is vitally important.

Diwakar Shetty,

11th February 2015

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Looking forward the upcoming Union Budget 2015-16, the Government should discuss about the problems of the realty sector through customers as well as developers. After the downside due to the 2008 global economic crisis, the realty sector has been looking for a suitable start to bounce.

Lokesh Patwa,

11th February 2015

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