Budget 2007-08: Real Estate: black of white ! there are many demands here !

Industry expectations are as follows:

Continuation of section 801B of the income tax which gives tax relief to the builders for construction of units, which are less than 1000 square feet built up in metros. Special incentives for making small houses i.e. one BHK apartments less than 400 square feet carpet area especially in Mumbai. --> Really the FM has little love for Mumbai though it is the place which gets in the biggest revenue. Cheaper housing certainly could go a long way with the Common Man Theme.

Increase in exemption limit under section 24 of the Income Tax act which is regarding the exemption of the interest alone on the home loan should go up from the present Rs 1.5 lakh to Rs 3 lakh effective from the date of Booking and not from the date of Possession. This is hope really but with the FM looking to reduce exemptions this would mean asking for the moon.

TDS to be brought down from 16.83% to 10% especially for NRIs and a flat slab of 15% should be considered on rental income for NRIs, as this is their only income against the property. --> With bursting Forex reserves the reason to appease NRIs seems unreasonable.. We dont think this will happen.

Standard deduction of 30% towards maintenance should be increased to 40% for local residents and 50% for NRIs. Again a hope and demand for more.. However if this is allowed against bills, it would improve demand for cement. Currently demand for Cement is driven by new house construction and big way by reconstruction / repairs. Its a guess whether this will happen.

Abolition of service tax on builders when a builder hires an outside contractor to build the units. --> With service tax having a pass through, its unlikely this will be agreed to.

Reduction in Stamp Duty from the existing 5% to 2.5% More steps to curb Black money. ---> Really it would be a step in the right direction however this revenue goes to the States who are already fighting the centre for the loss in sales tax. Unlikely to be agreed we think. Most houses have a cash and chq component when they are sold. Really, tough to curb it unless the stamp duty is lowered. The real estate market is quite illiquid.

Complete scrapping of Urban Land Ceiling Act. Rationalizing Property tax on both Residential as well as Commercial properties. and there are more demands.