In the run up to the upcoming Union Budget next month, real estate developers’ body CREDAI, has presented a wish list to the Finance Minister, which includes the demand for an inclusive housing policy and tax incentives.
The tax incentives suggested by the body include allowing tax exemption for small houses of under 60 square metres of carpet area and creation of special housing zones with tax exemptions on the lines of SEZ for constructing 45 square metres houses for low income groups and 30 square metre houses for the economically weaker sections.
CREDAI National President Lalit Kumar Jain said: “Over the last nine months, the credit to commercial real estate has gone down by more than 13 per cent and priority lending to the housing sector by 1.29 per cent. The present risk weightage of 1.25 per cent given by the RBI, resulted in choking of bank finance to real estate, which in turn impacted the availability of housing stock and the prevailing market-driven high prices.”
The lobbying body suggested scrapping of the RBI risk weightage and called for banking reforms to facilitate easy and low-cost funding for housing in order to encourage developers to increase the supply and bring down prices.
“The country’s housing shortage is very high at 18.1 million houses and an incremental need is around another 10 million houses. It is high time the Government took a pragmatic and practical look at the real estate sector today and take steps that help the industry in particular and the economy in general,” he added.
Calling for an inclusive housing policy, the developers’ body also demanded that housing should be accorded industry status.
“Affordable housing should be treated as priority sector and the rates of interest for housing loans should be brought down to an acceptable 7.5 per cent. Home loan should cover 90 per cent of total cost including taxes,” said Jain, suggesting a roll over facility at par with the industry.
Jain has also called for a fresh look at the slum rehabilitation projects and asked the Government to give incentives for projects built by the private sector. “Funds from schemes like Rajiv Aawas Yojana could be made available as slum dwellers’ contribution at the rate of Rs 50,000 per tenement,” he added.