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Ajita Shashidhar

"Tax rebates for rental housing will benefit the economy and the industry. Rental housing is suffering as the incentives are more attractive for acquiring property rather than renting it out," said Col. Prithvinath.

NEW DELHI, Feb. 17

APART from continuing with the existing I-T rebate of Rs 1.5 lakh on home loans, the real estate industry has also urged the Government to offer substantial tax rebates to encourage people to rent out residential properties.

Voicing his expectations from the Budget this year, Mr Anshuman Magazine, Managing Director, CB Richard Ellis (CBRE), said, "The Government should offer incentives to those renting their residential properties, as this will not only increase the supply of good and affordable housing in the country, but will also indirectly give an incentive to people to invest in real estate."

Agreeing with Mr Magazine, Col. Prithvinath, Senior Adviser, DLF Universal, said that housing was a vital indicator for determining the state of the economy and the Government should do everything to boost this sector. "Tax rebates for rental housing will definitely benefit the economy as well as the industry. Rental housing is suffering as the incentives are more attractive for acquiring property rather than renting it out," said Col. Prithvinath.

Talking about the Kelkar Committee's proposal to reduce the tax exemption on mortgage interest to Rs 50,000 on home loans, instead of the original rebate of Rs 1.5 lakh, Mr Sanjay Verma, Executive Director, Cushman and Wakefield, said that if the Government follows the Kelkar Committee in totality, the housing sector would be hit badly. "In the interest of the economy and the industry, the Government should completely exempt the interest amount for first-time buyers, and instead withdraw the incentives for the second-time buyers," he said.

Agreeing with Mr Verma, Mr H.K. Varma, Vice-President, Marketing, Ansal Properties Ltd, said, "If this concession is withdrawn or reduced, the people, especially those who have invested in houses keeping the tax rebate in mind, would feel cheated. Therefore, if not bettered the existing rebates should remain."

Apart from housing, the industry has also urged the need to better the incentives offered for investment in infrastructure development. "The definition of infrastructure under Section 80 IA of the Income-Tax Act should also include physical and social infrastructure. The physical infrastructure should include roads, sewerage and solid waste management," said Col. Prithvinath.

"Lack of social and physical infrastructure has been a major deterrent for development. If the Government offers considerable incentives to the private sector to invest in infrastructure projects, it would greatly contribute to the overall development of the economy," he added.

The industry has also urged the need for at least a policy initiative to open up real estate mutual funds in India. Said Mr Verma, of Cushman and Wakefield, "The market in India ready for real estate mutual funds and the players are quite keen."

Though Mr Magazine of CBRE also felt that the market is matured for the entry of real estate mutual funds, he said that the Government before bringing it in should ensure fundamental issues such as transparency is established in the market, as well as legal taxation issues are sorted out.

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