Budget 2016 needs to create a catalyst for people to invest in homes: Irfan Razack, Prestige Group Estates

As a vision of the Prime Minister himself, housing for all, certain anomalies need to be set right

  • Published On Feb 22, 2016 at 03:30 PM IST
The Budget needs to create some kind of a catalyst to encourage people into buying homes, says Irfan Razack, Promoter & CMD, Prestige Group Estates. In an interview with ET Now, Razack says that the government should address certain legal anomalies to give the realty sector a boost. Edited excerpts:

ET Now: What can this budget do to fix the real estate sector and revive demand?

Irfan Razack: I think something seriously needs to be done to create a catalyst for making people buy homes. Actually, in an Indian context, housing is always a need. Having said that, and as a vision of the Prime Minister himself, housing for all, certain anomalies need to be set right. Like, the lower and middle income group housing is taxed the same way as the upper income group housing is taxed... when I say taxed, it means service tax, VAT, as well as stamp duty.

If some rationalisation can be brought in, and I believe, to act as a catalyst, instead of doing mix of many things, one single thing that can be done which the central government has controlled over is anybody who is buying a home, one single house of every individual, whatever category you are in, the interest for that home, of course, up to a certain upper limit, the entire interest should be deductable from tax.

That way, what happens is, it acts as a catalyst. It encourages people to save and also encourages them to buy a home and create shelter for themselves, which is the vision of the government. Apart from this, there are certain anomalies in the law which I am sure the budget can take care of, or it should be taken care of administratively at some point of time or the other.

It is the provision of section 43CA, wherein this is the provision where the guideline value is taken at the time of registration for valuing the property, but many of our buyers who buy into the property, buy four years, five years hence they only get into an agreement of sale.

Final transfer is done when the property is ready. Now the value at which someone enters into an agreement is much-much lower than when the final delivery is done and the guideline value itself is different at that time, and then unnecessarily leads to litigation.

It is an anomaly that needs to be set right. There has to be some sort of mechanism to say that, look this flat was sold in so and so period, so the guideline value of that period should be applied, not at the time when the flat is finally ready and transferred to the customer.

Apart from that, even we have this one per cent deduction TDS on every single instalment that our customer pays. Administratively, again it is very-very difficult especially for the individual buyers. I had made a suggestion saying that, look we are not against this one per cent because I know the government wants to track these transactions. Fair enough, the best thing to do is if it can be done when the transaction fructifies. That is at the end. So when the final payment is made, then the one per cent deduction happens and the entire transaction can be tracked.

ET Now: If indeed the exemption on housing loans is increased, it may not be to the limits of Rs 5 lakh, but if it goes up Rs 2.5 or Rs 3 lakh, is that a big fillip for the listed space? Or it would not really matter to that high-end homes, it will essentially be for affordable housing?

Irfan Razack: I am not talking of high-end or low-end. What I am saying is that every citizen in the country requires a home. For one single home, I am not even going into the five lakh or three lakh discussion. On the really luxury segment you can put upper limit, but in the mid income and the affordable segment, the entire interest should be deductable on tax. That will make a big difference.

It will act as a catalyst instead of the government saying you get exemption if you put your money in PPF, and so on. If this whole thing can be put in towards home buying, because ultimately everybody requires a home. I am not talking about the second or the third home, but if they do it for the first home, it will be a huge catalyst and it will motivate people to invest in a home.
  • Published On Feb 22, 2016 at 03:30 PM IST
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