Liberalize the real estate, make houses affordable

The government’s principle is to provide roti, kapda aur makaan for all, then housing has to be made affordable everyone, especially in urban dwelling.

After liberalization in the aviation and telecom sectors, the common man of India has been able to use these facilities. In the same manner it has become necessary that real estate should also be liberalized.

Right from local government and up to the central government, real estate sector is taxed at every level so it has become the highest taxed sectors in the country. Taxes can build up to 45 per cent of the project cost. Therefore there is a need that government should rationalization of the taxes for the sector.

To start with, the finance minister should make the entire interest and EMI (equated monthly installment) payment of the first house completely non-taxable. This would bring down the burden of the buyers.

Moreover we appear to be moving towards an interest rate regime which is different from the international one. Over the last two years, as the interest rates have gone up there has been increase in the borrowing costs, by over 70 per cent. Therefore, there is a need to bring the interest rates down as is the global trend and this will make possible houses more affordable and also ease our borrowing costs.

Tax exemption on IT (information technology) parks should continue. If SEZs (special economic zones) are getting special tax exemptions, then same should be extended to IT parks as well.

Not all IT companies are capable of setting up of shops in SEZs, and, hence, should get the same exemptions by operating out of IT parks.

It’s important for the government to focus on mass affordable housing. Thus this segment must get some tax exemptions. If the finance minister plans out a special tax incentive for mass affordable housing projects, then the rates can be easily brought down by 15-20 per cent which will make houses more affordable for the common man.

In his last budget, the finance minister had brought leasing of commercial properties under the service tax umbrella. We have been opposing this move as leasing activities cannot be a service.

Over the last few years there has been increase in the input prices, so we are not demanding any special schemes or incentives to reign in input prices. We believe in free market economy and are willing to pay market prices of commodities we buy.

In fact what the government can do is to ensure that products are available when needed, like it brought down the import duty for cement; it can bring down the import duty for steel, which will make it cheaper.

On FDI (foreign direct investment), we need the government to consider, at least for the listed real estate companies, that such investments be treated as portfolio investment.