Prime Minister Narendra Modi hard-sold his government's Budget announcements, saying they will give a fillip to the real estate sector which now has to work to improve its credibility with the masses. Addressing a real estate conference organised by CREDAI, he said the government is constructing homes under the Pradhan Mantri Awas Yojana (PMAY) at a rapid pace to fulfil its ambitious target of providing housing to all by 2022.
Modi highlighted the steps taken by his government in the last four and half years to boost the real estate sector. He said the new realty law RERA and benami property legislation have helped in bridging the trust deficit between builders and consumers.
The sector has also progressed on ease of doing business and construction permits are being given at a fast pace, he said.
Talking about tax incentives for the housing sector announced in the Budget, the Prime Minister said these sops will benefit both the developers and home buyers. The move to exempt people earning up to Rs 5 lakh from payment of income tax will benefit the housing sector as the surplus will find its way into real estate, he said.
"Youth will be encouraged to buy house with this exemption," Modi said. In a lighter vein, Modi said that the Prime Minister himself has to explain the benefits of the Budget provisions to developers as they are still stuck on GST issues.
He also listed out other incentives such as increase in the tax deducted at source (TDS) threshold for rental income from Rs 1,80,000 to Rs 2,40,000. To boost purchase of second homes, Modi said the government has announced that capital gains of up to Rs 2 crore could be rolled over for investment in two housing units from the current one unit only. It also exempted tax on notional rent on a second self-occupied house.
For boosting affordable housing, the Prime Minister said the 100 per cent deduction of profit under Section 80-IBA of the Income Tax Act is being extended for one more year to housing projects approved till March 2020. Modi said the period of exemption for levy of tax on notional rent on unsold inventories has also been extended from one to two years.
He said the GST on sector has been reduced to 8 per cent for affordable housing and 12 per cent for other under-construction homes. The GST rate on various construction material has also been brought down to 18 per cent from 28 per cent. The Prime Minister asked developers to target the 'neo middle-class' as large number of people are coming out of poverty.
"Now is the time, the target should be on neo middle-class category," he asserted. Expressing concern over the image of the sector, Modi asked developers to improve their credibility that has been affected because of default by some builders. He also urged them to adopt new technologies for faster construction.
"Real estate sector plays a catalytic role in providing employment. Do you get enough respect? Who is responsible?" he said, and asked developers to focus on improving their image. While highlighting the success of PMAY, Modi hit out at the previous government on the pace of construction as well as quality of houses built for urban and rural poor.
Modi said his government has not named the scheme after any "naamdaar" (dynast), but as the Pradhan Minister Awas Yojana, reflecting its true intent. "Whoever will be the PM, the programme will continue," he said. The Prime Minister said 1.5 crore houses for the poor have been built at twice the speed to realise the target of housing for all by 2022.
He said there is no corruption in identifying the beneficiaries under the PMAY. "By 2022, all homeless will get a house. We do not make tall claims," he added. Modi said the Central government has been trying to bring a positive change in the real estate sector during the last four and half years.
Demonetisation curbed use of black money in the sector, Modi said, adding his decisions face problems in the beginning as he thinks ahead of time.