FIABCI requests clarity on taxes and industry status for realty sector from Budget 2018
The FIABCI International hosted a panel discussion on Pre-Budget expectations 2018-19, voicing the views of Bengaluru’s developer community along with other stake holders in the real estate sector for the forthcoming financial year.
The panellists included Mr. Farook Mahmood, FIABCI World President and Chairman & Managing Director Silverline Group, Mr. Ashish Puravankara, President CREDAI Bengaluru and Managing Director Puravankara Ltd, Mr. Shankar Sastri, President CREDAI Karnataka and Joint Managing Director Sterling Developers, Mr. Raj Menda, Corporate Chairman, RMZ Corp along with Mr. Rajiv Khaitan, Partner, Khaitan & Co, Mr. K T Chandy, Partner Tax & Regulatory Services, Ernst & Young (India), Mr. Abhishek Goenka, Partner, PwC and Mr. Naresh Narasimhan, Principal Architect Venkataramanan Associates.
Moderated by Mr. Abhishek Goenka, the discussions veered around various issues that impacted the functioning of the real estate sector ranging from segments that invited double taxation to requirement of adequate incentives for first time home buyers. The panel deliberated on a range of specific tax elements that impacted the industry’s functioning in the current market scenario, requesting clarity on select legislations and taxes levied, single window clearance for receiving project approvals, availability of cheaper land for affordable housing, abolition of stamp duty on sale of flats, digitising land records besides a host of other issues.
Commenting on the discussions, Mr. Farook Mahmood, FIABCI World President and Chairman & Managing Director Silverline Group said, “There is vital need for changes in current levies and laws applied to the real estate sector. Many lead to double taxation besides pushing up cost. The current set of regulations also increase the holding cost of the industry especially in a scenario where developers are finding it difficult to offload stock. We recommend a more realistic approach in the forthcoming budget, making both cost and pricing market friendly, especially in the affordable segment and for first time home buyers.”
Stating that real estate sector serves as a key contributor to the GDP and is also the fourth largest employment generator in the country, Mr. Abhishek Goenka, Partner, PwC called for extending industry status to the real estate sector. “This will enable developers to raise funds at lower rates which will in turn reduce cost, push up demand and indirectly trigger labour absorption.”
Mr. Ashish Puravankara President CREDAI Bengaluru and Managing Director Puravankara Ltd added, “Currently, tax is levied on notional rental income on unsold stock that lies with developers after a year of receiving completion certificate. Given market conditions, it is not easy to offload inventories within one year and the tax puts pressure on builders to dispose flats at a loss. The time frame for levying this tax should be increased to two years.”
The participants hoped that the key issues put forth would be addressed in the forthcoming budget, easing the tight marketing conditions currently faced by the developers.