Real Estate Ludhiana/Developers glad with decision of government to ease FDI norms for real estate sector: Vikas Gupta

Hope, the government will continue taking more initiatives in the future
Ludhiana, July 17, 2014: Reacting to the Union Budget for current fiscal (2014-15), Vikas Gupta, Joint Managing Director (JMD), Earth Group says, “It is matter of delight that the Union Finance Minister, Arun Jaitley while presenting budget for fiscal 2014-15 has announced at least few positive steps for the real estate sector. Developers are glad to find that the government has taken another significant decision to ease FDI norms for real estate sector by bringing down minimum development area to 20,000 square metres from 50,000 square metres and minimum capitalisation requirement for wholly owned subsidiaries to $5 million from $10 million. This initiative taken by the Centre will really make enable many more projects to qualify for attracting FDI. Such initiatives were required in the larger interest of real estate sector, particularly in view of ongoing recession.”
In a statement here, he added, another initiatives such as, introduction of REIT, are also good to note. Developers were already looking towards the government hoping for a proper REIT (Real Estate Investment Trust) structure.
He said besides, it is also a welcome step that income exemption on home loan interest under Section 24-B of the Income Tax Act has been raised to Rs.2 lakh. This step will lead people to save tax. Moreover, this step will also prove beneficial indirectly for real estate sector. Previously, this limit was Rs.1.5 lakh. The government has announced to allocate Rs.7,060 crore for 100 new smart cities, which will prove a milestone in giving a boost to real estate sector. It is believed that this initiative by the Centre will ultimately lead to create demand for housing in the long term.
Gupta said apart from real estate sector in general also for smooth functioning of business, government commitment for introducing goods and services tax (GST) this year is also a welcome step. I had recently stated that “the government must announce the implementation of GST in order to rationalise indirect taxes.” GST is likely to simplify the present complex tax system. As such, the initiative taken by the government in this regard is a welcome step.
He added however, the government has not addressed a long-pending demand of developers to give “industry” status to real estate sector. But, players in real estate sector are not disappointed at all. Players understand that it is just a beginning. The government will continue taking more initiatives in the future. As such, the government may think of giving industry status to real estate sector in the time to come.