CREDAI resents levy of MAT for SEZs and units

The real estate sector feels hard done by the proposals in the Union Budget 2011-12 and feels a lot more could have been done to resolve some of its pending issues.

Lalitkumar Jain, Chairman and Managing Director, Kumar Developers, and Vice-President, Confederation of Real Estate Developers' Association of India (CREDAI), felt that allowing deduction for investment into affordable housing was a welcome step and “will surely boost morale of housing industry and will accelerate investments in affordable housing. The increase in limit to Rs.15 lakh for 1 per cent subvention, increasing limit to Rs.25 lakh for priority lending for home loans are welcome.”

However, much more could be done to accelerate supply of affordable housing stocks. “Also we register our displeasure over minimum alternate tax (MAT) in Special Economic Zones (SEZ). The government should not deflect from declared policy of tax exemptions as this gives wrong signals to investors in such projects. Supporting middle class through increasing deduction on home loan interest to Rs.2.5 lakh was expected but did not come..”

Anuj Puri, Chairman and Country Head, Jones Lang LaSalle India, said, “it would seem that the Union Budget 2011 pointedly ignored the larger issues affecting the Indian real estate sector at this sensitive stage of revival and growth. SEZs have been brought under the purview of MAT which basically diminishes the benefits that SEZs offer for developers over other commercial real estate asset classes.”

Pradeep Jain, Chairman, Parsvnath Developers, commended the allocation of Rs.58,000 crore to Bharat Nirman projects and proposal to set up Mortgage Risk Guarantee fund for rural housing. He felt the proposal to cut excise duty on cement and steel would help developers in cutting input costs.

Sanjay Chandra, Managing Director, Unitech, said “Measures such as expanding the coverage of interest subvention and providing 100 per cent deduction in respect of capital expenditure incurred on development of affordable housing, will certainly aid in boosting demand and development of affordable housing.”

Interest subsidy

S. Varadarajan writes from Chennai:

The one per cent interest subsidy extended to small loans up to Rs. 15 lakh/cost Rs. 25 lakh (earlier Rs. 10 lakh/ Rs. 20 lakh) and the continuation of tax benefit on interest on home loans up to Rs. 1.50 lakh are positive moves for the housing finance sector and will fuel growth in the sector, according to Srinivas Acharya, Managing Director, Sundaram BNP Paribas Home Finance. The setting up of mortgage registry to prevent frauds was also a positive move, he said.

GRK Reddy, Chairman and Managing Director, MARG Group, said the investment-linked weighted deduction, primary lending enhancement from Rs.15 lakh to Rs.25 lakh, liberalisation of interest subvention of one per cent and creation of mortgage risk guarantee fund to enhance credit worthiness of EWS and LIG households, will together provide a surge in affordable housing demand.

He said the allowance of tax-free bond of Rs.30,000 crore to be used by various Government undertakings in 2011-12 will give a boost to infrastructure development.