Did Pranab Mukherjee get it right this time according to our real estate players? Pallavee Dhaundiyal Panthry spoke to real estate developers about their opinion on the subject and their industry. Paradigm shift or run-of-the-mill?Developers have welcomed the increased time limit for the completion of projects from four years to five years for claiming a deduction of their profits. However, they are not really for the increase in excise duty because, according to them, this move will increase input prices and the burden will eventually be on developers as well as buyers. The 10 per cent service tax in real estate, as per many, will prove more unfavorable to the buyers. Besides, the changes in the real estate sector included allocation of huge funds in the rural area and property rights to slum developers and increase in the set time limit for accomplishing a project from four to five years. GAURAV MITTAL, DIRECTOR, CHD DEVELOPERS The up side of the budget includes, surchar ge on corporate tax decreased from 10 per cent to 7.5 per cent, which will prove beneficial for all corporates. Besides, extension of subsidy for home loans less than Rs 10 lakh for one more year more is again welcoming. However, the unfavorable point in budget 2010-11 is the service tax, which will be applicable on all under construction properties. At one side the government talks about promoting affordable housing and at the same time making this tax applicable would only make these houses more expensive, which is ironic. Increase in excise duty from eight per cent to 10 per cent, means increase in the price of raw material, will eventually lead to costlier construction and costlier houses. I feel some initiatives should be taken to make affordable housing, economical to construct in true sense and not just as an eye wash. This may not prove to be fruitful. SANJEEV SRIVASTVA, MANAGING DIRECTOR, ASSOTECH Allocation of Rs 1,270 crores for the FY11 under the Rajiv Awas Yojn a along with special emphasis on low cost housing and slum rehabilitation will help buyers of low cost housing in the rural and semi-urban area. Five years extension in the time-limit for completion of projects eligible for deduction under section 80-IB and extension of one per cent interest subvention for low cost housing to 31.03.2011 along with increase in the IT slab rates for individuals would boost demand for budget homes. Proposed service-tax at 10.3 per cent on the value of additional services provided by the builder and lease of vacant land (if construction is undertaken thereon) would make the cost of home dearer to the buyer. Imposition of service tax on rentals with retrospective effect from 1st June 2007 would cost one percent to 1.25 per cent of the retailer's turnover, which is neither in the interest of the owner of the commercial space nor the retailer using that space.Talking from the developers' perspective, developers undertaking low cost high volume mass housing projects will be benefitted. Investment-linked tax holiday for all new hotels in the two-star plus categories would help developers undertaking hospitality projects.But applicability of service tax as detailed above and increased indirect taxes on raw materials such as steel and cement will increase the end cost and project costs would go up by four to five per cent, which would adversely affect the developers. This may not be a good sign for the times to come for this industry. Anyway, we have to make the best of the good points from this.R K ARORA, CHAIRMAN & MANAGING DIRECTOR, SUPERTECH The budget, this year talks of both positive and negative aspects for the real estate developers as well as the buyers. There is a revision in personal income tax slabs, which will strengthen the purchasing power of the buyers affecting the demand of the residential sector. The common man will also be benefited by the continued subsidy of one per cent for affordable housing loans, which will help this sector to grow. On the other hand, a two per cent increase in excise duty of cement and steel might not prove profitable for the real estate developers as the cost of construction would be expensive which will ultimately result in the increased cost of the project and hence the buyers will be affected. Also, it would have been a great support to the real estate sector if Section 80I (B) would have been renewed to thrive the demand of affordable housing. ABHISHECK LODHA, MANAGING DIRECTOR, LODHA DEVELOPERS The finance minister has taken a pro-active measure by reducing the income tax burden on the middle class and hence, increasing disposable income and consequently leading to increased demand for consumables and housing. The focus on development of infrastructure is crucial as the world is looking at India as an important member of the global community. While there are no major initiatives for real estate, the lack of extension of 80 IB benefits to new projects started after March 2008 is a missed opportunity, since it would have led to creation of large volumes of affordable housing for the "Aam Aadmi' and also spurred economic growth due to strong cross industry linkages of the construction chain. We hope that the intent of the government to continue the economic momentum through a combination of consumption growth and fiscal discipline will be further enhanced through the coming year by concrete initiatives on increasing productivity in our country - this would ensure that the goal of double digit growth rates is achieved soon. ANIL KUMAR SHARMA, CHAIRMAN & MANAGING DIRECTOR, AMRAPALI GROUP While extending measured benefits to the realtors, the proposed budget visions its commitment to promote "Aam Aadmi" housing by proposing major allocations for it. Developers and real estate companies, however, were looking for much more than what the finance minister had to offer. The real-estate sector is all about demand and suppl y. In India, demand far outstrips supply. Budget 2010 is positive, balanced and growth oriented. By raising the exemption limits in the income tax, the government has sought to financially empower the consumers, which would boost real estate sales. Although government has increased the cost of raw material, yet the budget this time can be viewed in a positive way. The industry will witness an upsurge shortly marking a benchmark of recovery from the ongoing worldwide recession as the government has sought to financially empower the consumers, which would boost real estate sales.AMAR AMBANI, VICE PRESIDENT RESEARCH, INDIA INFOLINE LTD One major devil in the budget detail is for the real estate sector. Service tax has been levied on additional services provided by a builder to buyers like preferential location, internal and external development of complexes (except vehicle parking). Furthermore, unless the entire consideration for a property is paid after completion of construc tion, the construction activity will be charged service tax. Renting of property, rent of vacant land under agreement to undertake construction of building or other structures will be charged service tax -- a drag on the bottom-line. MANISH PERIWAL, CHAIRMAN & MANAGING DIRECTOR, PIONEER URBAN LAND AND INFRASTRUCTURE The Government has treaded a line of fine balance to lead the economy to high GDP growth rate by investing in infrastructure sector, yet keeping the fiscal deficit within manageable limits which has already undergone a substantial deviation at 6.8 per cent from 6.1 per cent at the time of interim budget. In the backdrop of ambitious 'housing for all' and `Slum free India' agenda, the rural and urban housing sectors have been given importance, largely through Government's flagship programmes rather than the incentives real estate companies were hoping for. We feel investment in infrastructure will have a cascading impact on the residential and commercial projects as the development foot print can expand. The concessions in Direct Taxes on the salaried class should have a positive impact on the mid to premium residential housing segment in which we operate. But launched projects will suffer as the top line is locked and thin margins will erode further. The buyer will be impacted.Courtesy:- FT dt:- 07-Mar-2010For information about real estate, real estate india, Indian real estate property, property in india, Indian property, apartments, apartments for sale, apartments for buy, apartments for sale in delhi, apartments for sale in gurgaon, apartments for sale in indirapuram, flats for sale in delhi, homes, homes for sale, houses for sale, homes for sale in delhi, homes for sale in gurgaon, houses for sale in delhi, houses for sale in gurgaon, property investment options in delhi, investment option in real estate, real estate consultant, real estate agents, real estate developers and many more log on to and /
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