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 that 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 said.
Jain pointed out that the introduction reliefs under sections 80IB and 80 IA of Income Tax act in 1998 had given a big boost to the entire economy as the direct tax benefits resulted in multiplication in indirect tax revenues of centre and huge gains to the states through stamp duty and other taxes. Even municipal bodies earned well through octroi, premiums and cess. Besides, the employment generation was also phenomenal.
Real estate contributes as much as 5.5 percent of to the GDP and together with the construction industry the share goes up to 11 percent. Even in China, which is more known as manufacturing hub, the contribution of real estate to its GDP is as high as 30 percent.
"We see no reason as to why real estate cannot become the new growth engine for the Indian economy," Jain said and pointed out that the sector is highly labour and capital intensive. Over 400 industries depend on the real estate and construction and that is how we can ensure sky high growth of the GDP.
He regretted that over the last nine months credit to commercial real estate has gone down by more than 13 percent and priority lending to housing sector by 1.29 percent. The total lending to CRE is a mere 4 percent
Jain argued that the present risk weightage of 1.25 percent 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.
CREDAI, therefore, suggested scrapping of the RBI risk weightage and called for banking reforms and facilitate easy and low-cost funding for housing to encourage developers increase the supply and bring down prices.
Calling for an inclusive housing policy aimed at helping the common man realise his dream of having shelter, the developer's body also demanded that housing should be accorded industry status. Affordable housing be treated as priority sector and the rates of interest for housing loans should be brought down to an acceptable 7.5 percent
Home loan should cover 90 percent of total cost including taxes, Jain said and suggested Roll over/COD facility at par with the industry.
CREDAI also suggested a special focus on rental housing to serve the needs of a huge section of the population that may not be in a position to immediately buy houses. Funds from global resources could also be invited for this.
Suggesting the formation of a proper Real Estate Investment Trust (REIT), CREDAI called for special rental housing projects under the affordable segment, treating the expenditure as capital investment for long-term capital gains, exemption from Income Tax, Service Tax, VAT and Stamp Duty for rental housing. Even the rental income from these projects must be exempted from Income Tax as the indirect benefits are far too many.
Jain called for a total new look at the slum rehabilitation projects and 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.
On Information technology projects, CREDAI suggested tax benefits to all such buildings and scrapping the minimum alternative tax provision. All commercial building generating white collar jobs should be incentivised by liberal bank funding and allowed a 50 percent tax concession under income tax act.
Jain said SEZ sunset should be extended by two years from 2014.
CREDAI called for reducing FDI eligibility limits by 20 percent from the existing 50,000 sq mtr and 25 acres to area to be reduced to 20 percent.
External Commercial Borrowing (ECB) should be permitted as per the FDI norms and be allowed for housing financial institutions and even for all affordable housing and rental housing projects, he said.
For improving the liquidity, Jain suggested to the government to launch tax free bonds for housing and make funds available at 5 percent for affordable housing projects as well as buyers under the segment.
He suggested a comprehensive Voluntary Declaration of Income Scheme to check the curse of black money and improve liquidity.
Calling for a major support for adopting new technologies, Mr. Jain suggested exemption from Import Duty, VAT and excise duty.
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