Dr. Niranjan Hiranandani, President, NAREDCO & ASSOCHAM
Exemption under section 43CA, Income Tax Act
“Differential above 10 per cent between circle rates and agreement value translates into tax penalties under Section 43CA of the Income Tax Act. This has been a major stumbling block for price rationalization,” said Dr. Niranjan Hiranandani, President, NAREDCO and ASSOCHAM. “This pinches, especially when it comes to liquidating unsold inventory. Industry bodies like NAREDCO have been pointing out the urgency with which this needs to be sorted out, and the Hon’ble Finance Minister, in a limited-period offer (up to 30 June 2021), has enhanced this differential from 10 to 20 per cent. This is welcome. The FM also mentioned a cap on the flat value to be eligible for this – Rs. 2 crore. This will result in most projects in Metro Cities not being able to take advantage of this, it has consistently been pointed out by industry bodies that price points in Metro Cities need to be kept in mind while offering any such relaxation,” he pointed out. He went on to add that the ideal situation would have been one where this relaxation would be applicable to commercial real estate transactions as well. “Real estate as an industry and end-users, both would benefit if these two suggestions can be incorporated,” he concluded.
Additional funds for PMAY
Funding issues have been a major challenge for real estate,” said Dr. Niranjan Hiranandani, President, NAREDCO and ASSOCHAM. “Finance Minister Nirmala Sitharaman’s announcement, about additional funding of Rs. 18,000 crore for PM Awaas Yojana-Urban will add to the sparkle this festive season. This is over and above the Rs 8,000 already allotted this year, and will translate into more homes for home seekers, more employment opportunities as also good business for suppliers and industries peripheral to real estate and construction,” he concluded.
Mr. Bhushan Nemlekar
Director, Sumit Woods Limited
“The Central Government has taken a step in the right direction. Looking at the current market condition, many developers with ready inventory will be able to sell as the prices have actually been corrected in large parts of urban areas in India. I hope we see improvement in sales in the next one year. This. income tax incentive will stimulate demand for buying homes. This is a welcome move and we are optimistic that the Government will introduce more proactive steps for giving additional relief to boost the real estate industry.”
Mr. Ram Naik – Executive Director,
The Guardians Real Estate Advisory
“The FM’s announcement of an increase in difference between the so called circle rates and the agreement value, will lead to further rationalisation of prices in the sector, especially in the premium or mid-income housing segment. While the same is applicable only for units priced lesser than 2 crores it will help developers in the primary market get an upper hand vis-a-vis the secondary market. The move can be attributed to the concerns raised by developers about their inability to reduce or offer lucrative prices because of the tax liability that would accrue as a result of price reductions. But on the other hand, the major part of the unsold inventory in metro cities is upwards of Rs.2 crores in the Rs.4.75 to Rs.12 crore range. A blanket announcement without the capping would have lead to cheers for developers across the sector and the customers, this Diwali.”