Atul Goyal, CFO, Brigade Enterprises Ltd. 

Real Estate Sector benefits (Proposals)

·       Real Estate to be given Infrastructure Status

·       SEZ offices should be allowed to lease their space to Non-SEZ tenants also.

Income Tax:

·       Section 80IBA; Affordable housing projects;

a.    Applicable for those projects approved on or before 31.03.2020. Require extension of another two years due to COVID-19 pandemic.

b.    Presently commercial space is given only 3% of the aggregate carpet area of the housing project. We request 5% to 10% is the ideal percentage to sustain the economic benefits from the project. Since, 3% is very minimal for metro cities like Bengaluru. 

c.     Presently the project needs to be completed within 5 years. We request, extend the completion period from 5 years to 7 years.

d.    The cap on the affordable housing projects Rs. 45 lac is very minimal, and we urge government to increase the limit upto 80 lacs in metro cities and 50 lacs for non-metro cities.

·       Section 80IAB benefits for developing SEZ project

Presently developer will get income tax benefits u/s 80IAB for any ten consecutive assessment years out of fifteen years beginning from the year in which SEZ notified by the Government.

We request and recommend here to increase the total number of years i.e. instead of 15 years we request government to consider 25 years. Else, we as a developer are hardly getting any income tax benefits under this section.

·       Deemed income from house property u/s 23(5) of the IT Act.

Stock-in-trade flats are subjected to income from house property if the stocks-in-trade flats held more than two year [Finance Act, 2017 has inserted sub-section (5) to Section 23 (section 23 talks about determination of annual value)]. We request government to do away with immediate effect or enhance the stock in trade period at least by two more years. Since, as a developer we are incurring carrying cost, finance cost, overhead cost, etc in addition to this paying notional income tax is huge burden. We urge government, to for the time being, remove taxing on all deeming incomes of real estate sector if not for all sectors.    

·       Interest claim by individual u/s 24.

The hike in the interest rate claim from 1.5 lac to 2 lac is a positive note. However, we urge the government to increase the benefit at least upto 3 lac for next few years. This will definitely give some positive sentiment in the buyers mind set.

·       Benefit to residential apartment buyers u/s 54:

With effect from Assessment Year 2020-21, the Finance Act, 2019 has amended Section 54 to extend the benefit of exemption in respect of investment made in two residential house properties

The exemption for the investment made, by way of purchase or construction, in two residential house properties shall be available if the amount of long-term capital gains does not exceed Rs. 2 crores.

We request the government to consider short term Capital Gains also for at least next 3 years or increase the existing long-term capital gains from 2 crores to 5 crores. This really boost the real estate sector.

·       Section 80EE: Interest claim by individual

Presently an individual is eligible to claim interest income utpo Rs. 50,000 based on certain conditions that the loan amount does not exceed Rs 35,00,000, the value of residential house does not exceeds Rs. 50,00,000 and the individual does not hold any house on the date of sanction of loan.

We urge government to increase the loan and apartment/house value from Rs. 35,00,000 to 70,00,000 and apartment/house cost from Rs. 50,00,000 to 1,00,00,000.  

GST:

·       GST Rates:

Presently effective GST rates are 1% for affordable housing projects and 5% for other than affordable housing projects. The cap on the affordable housing projects Rs. 45 lac is very minimal and we urge government to increase the housing cost limit upto 80 lacs in metro cities and 50 lacs for non-metro cities.

·       Deeming deduction of 1/3 land value.

Presently the total apartment value there is 1/3 deduction for land deduction. We urge government to increase the ceiling limit upto 45% in metros and non-metros 35% so as to balance the cost of the project.  

·       ITC claim for residential projects

Presently, w.e.f. 1.4.2019 for the new projects ITC benefits are not available. We urge the government to remove the restriction on ITC claim and allow developers to claim the ITC benefits so that the project cost would come down to that extent. If not 100% claim at least some proportionate benefits so that the construction cost can be minimized.

·       GST rate reduction for steel and cement. If not in overall rate reduction, at least for affordable housing projects.

·       ITC Claim on construction of commercial building

At present there is lot of confusion on credit eligibility on construction of commercial buildings. We urge Government to clarify the issue by allowing ITC benefits for construction of commercial buildings.

·       Celling limit of Rs. 45,00,000 on affordable housing unit.

Presently with new GST rate 1% is applicable if the housing unit is having carpet area 60 sqmts and the value of the housing units is less than Rs. 45,00,000.

We recommend government to increase the celling limit from Rs. 45,00,000 to 60,00,00 at least in metro cities.

·       TDR/JDA rights needs to be kept outside the purview of GST as these rights are purely in relation to immovable property

·       Expecting Government to merge Stamp duty with GST Act.