Guidelines To Extemporize The Real Estate Segment: Budget 2014

The real estate sector has been of the major contributors in the growth of the economy and hence this sector has been a backbone of the Indian Economy. Many of the real estate players have been involved in changing the face of the country. The county from the under developed has succeeded under the category of developing country due to the emerging real estate activities and developments taking place in the city at a faster pace.


The realty sector is estimate to provide around 6.3 percent of the Nations GDP in 2013 and 2013. Due to the major source being the revenue generated for the Central, State and the Local Government as well. The real sector is said to provide employment to nearly 50 million people also including the construction section.

The realty sector also supports nearly 300 ancillaries in forms of industries catering to cement, steel, paint, transport and other building materials.

As the industry has been exposed to the foreign investors with year 2005 the sector has witnessed nearly US$ 22 Billion direct investments made through the foreign residents. There is also an expectation to gain around US$ 180 Billion by the end of 2020.

Nonetheless over the past few years the real estate sector is facing a few problems pertaining to the increased land prices, issues relating to funding, slump in sales, numerous approvals and also a significant time needed for approvals and clearances. There is also an immediate requirement of a regulatory body which could make the entire process much transparent and streamlined. Though one can never neglect the fact that this sector has an immense scope for growth and has an ultimate rising potential this is evident to the middle class as well as the high and urbanized class of people. Thus the proposed development of new cities and the substantial development of affordable housing is indeed a sign of revival of the economy globally.

Thus it is extremely essential for the government to reform its policies and regulation regarding the tax rules to render a much smooth functioning of this sector.

  1. The article discusses some of the necessary changes which should be initiated in bringing about major positive changes in the process.
  2. The conveying of development rights includes the transferring of rights related to land. There is a heavy stamp levied on such transferring of rights. The current service tax regime denies all such charges and hence these taxes should not be asked. A well formulated clarification should be issued ensuring the transferring of developments rights stating that it will not attract service tax.
  3. The RBI illustrates this sector as a risky which daunts it from retrieving funds. This sector should be given an industry status as it has major employment opportunity and it also contributes a lot of the GDP. Getting an industry status will help this sector to access bank funding with better interest rates and a much lower collateral value.
  4. The service tax levied on construction activity is not obtainable against output service tax liability on rentals charges on immovable property. The service tax should be allowed in order to escape the gushing paraphernalia of such duties.
  5. The consent of the Project affected families should be reduced apparently. As the PFA are provided with unique recuperation as well as migration benefits. The compensation provided to the urban is two times of the market value whereas to the rural id four times of the market value it also seems to be sheer enough.
  6. The real estate regulatory agency aims at a requirement of setting aside up to 70 percent of the total sale proceeds. When the land prices are considered it falls generally between 40 to 60 percent this variation is due to the place where it is located. It is also advised that higher limit of 70 percent should be reduced or should be fixed at an appropriate cap so that the money in the account is enough to meet the projects construction cost, thus, providing the needed liquidity.

Thus, if the above discussed advises are executed well there may be chances for the central and the state government to bring the functionality of the real estate in a much streamline manner thus, crafting out a pathway with a positive concrete taking the Indian Economy to the succeeding level.

This Article is published by Dreamz Infra Review.

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