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'Govt needs to provide stimulus for real estate sector'

The government has already expressed its vision of housing for all by 2022. If this is to become a reality, they will need to provide tremendous amount of stimulus for the real estate sector so that homes become more affordable and get produced much faster to meet the objectives.

Rohit Gera        Last Updated: January 30, 2017  | 19:39 IST
'Govt nedds to provide stimulus for real estate sector'
Rohit Gera, Managing Director, Gera Developments & VP, CREDAI - Pune Metro

The introduction of the Real Estate Regulatory Act as well as demonetization last year has been extremely disruptive for the real estate sector.

The government has already expressed its vision of housing for all by 2022. If this is to become a reality, they will need to provide tremendous amount of stimulus for the real estate sector so that homes become more affordable and get produced much faster to meet the objectives.

Steps that can be taken by the government include -

1. Widen the scope of the tax free status for projects which currently require 90% of the project potential to be developed within 3 years. This is a tremendous deterrent for large-scale projects as it is virtually impossible to complete these projects within 3 years.

2. To encourage the supply of rental housing and increase the standard deduction available for rental income.

3. To encourage people to acquire the existing inventory available in the market, allow for an increased deduction of an extra 100% of the interest payment made by the flat purchases to the financial institutions for a 5 year period.

This will drive down the effective rate of interest for the flat purchasers. The ensuing increase in real estate activity generating income to the government from other sources, will more than compensate for the reduction in income on account of the increased deduction.

In addition I do hope that the government takes steps in the budget to curb the regeneration of Black Money in the economy. A simple measure for this could be limiting total cash payments to say 1% of the total expenses of a company in each month. This will force all payments for all businesses to be made by cheque.

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