The real estate sector, which is struggling with dwindling sales, high inventory and price stagnation, expects Union Budget 2020 to boost growth and provide a solution to the non-banking financial company (NBFC) liquidity woes. In her first budget, Finance Minister Nirmala Sitharaman had provided some incentives to address both demand and supply in the sector. But a lot needs to be done to revive the sector.
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As per the recent Centrum research report, the sector, which contributes more than 8 per cent to the Indian economy, expects quick implementation of alternative investment funds to rescue stressed residential projects. Here are some of the real estate sector's expectations:
Resolve the NBFC crisis
It has been almost nine months since the NBFC crisis started with IL&FS group companies defaulting on its payments. The credit squeeze has not only impacted the NBFC sector but has spread across sectors including real estate. According to Surendra Hiranandani, Chairman and Managing Director, House of Hiranandani, there is an urgent need to address the challenge of liquidity faced by the sector, especially after the NBFC crisis. He said that if the challenge would not treated on priority, it would hamper the confidence of developers as well as buyers which may severely impact the sector as well as economic growth.
Pour in more investments
The sector has been going through a cash crunch and the current NBFC crisis has worsened it. Therefore the industry hopes the government will help the sector in raising funds from other sources by relaxing norms.
Offer tax sops for homebuyers
In the previous budget, the government had announced a few incentives to encourage buying in the real estate sector but the industry believes more needs to be done. Home-loan borrowers are expecting tax reliefs in the form of changes in Section 80C and Section 80EE deductions.
Bring back Input Tax Credit (ITC) benefit
The GST Council has done away with the input tax credit (ITC) and reduced the GST rate for under-construction flats to five per cent from 12 per cent and for affordable housing to one per cent from eight per cent, from April 1, 2019 for all new projects. Although it is a welcome move for the home buyers, it is hitting the margins of the developers.
By Chitranjan Kumar
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