According to a statement from CREDAI, at the discussion, they voiced their concerns regarding “the impact of GST being levied on reconstruction projects/ rehabilitation flats which are being built and given back, free of cost, to existing occupants.”

With the regulations for redevelopment in the Mumbai Metropolitan Region (MMR) falling under the purview of DCPR 2034, which supports such projects by allowing developers to use higher FSIs (floor space indices), CREDAI MCHI claimed that the GST imposed on such projects is defeating the very purpose of increasing real estate value by seriously jeopardizing the financial viability of numerous projects.

The provision of new homes to current occupants, tenants, flat owners, and slum dwellers (output service) and the sale of the flats, shops, and offices (sale component) on the open market are currently viewed as separate transactions, which results in increased tax requirements, the statement continued.

CREDAI claimed that it had made numerous arguments to restructure the GST provisions in order to create an environment that is more favorable for rebuilding projects.

“The flats to existing occupants/slum dwellers/tenants/flat owners are offered free of cost, and hence no GST should be charged where there is no consideration,” the statement stated, noting that the cost of construction and rehab is already included in the cost of sale component.

As a result, taxing the sale and rehab separately would result in double taxation, according to CREDAI.

The statement continued, “Sale component is already offered for GST, and therefore the value of construction of rehab is also offered for GST being within it.

According to CREDAI, the building of rehabilitation projects is an input service that is necessary for the building of sale components, which is an output service.

According to the group, “In actuality, 10% GST is currently being charged on flats being sold from the sale component (5% on rehab and 5% on sale, both borne by ultimate consumers).”

The MMR is one of the most lucrative real estate markets in India, but according to Boman Irani, president of CREDAI National, the area needs a supportive redevelopment ecosystem to reach its full potential.

About 50% of the population still lives in slums or old, decaying structures, he continued, and there are many of these.

For Irani, some regulatory and taxation issues need to be corrected, which will improve the long-term demand-supply for these projects.

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Real estate developers body is looking for a 12-month deferral of housing loan instalments, a 2-year moratorium on project loans, issuance of building plans and other permits that are being supported by payment of fees, and other steps to help the real estate industry in UP and Haryana.

The National Real Estate Development Council (NAREDCO-UP) has written to Finance Minister Nirmala Sitharaman urging them to support the sector in this tough period.

“Because of the impact of Covid-19, housing sales are almost zero. There are no buyers in the sector; of course, the valuation of housing prices is zero. We have requested Finance Minister for some relief package,” said Supertech Chairman RK Arora, who also serves as Naredco-UP presidents.

To address the impact of the pandemic, NAREDCO said it is important that all project loans disbursed by the banks be given unconditional 2-year moratorium during which time, no project account should be considered as NPA and no recovery action should be taken against any developer. It has also asked for the removal of all NCLT/DRT cases against the developers.

To alleviate liquidity for retail home buyers who have taken home loans but require liquidity assistance owing to a pandemic condition, the body has demanded a 12-month deferment for EMI to pay home loan instalments. Penal interest can be permitted through this time of waiver of the additional interest.

CREDAI has stated that the industry is already facing a severe shortage of construction materials owing to import constraints and the closure of state borders leading to supply chain problems and strong rise in material prices. Because of the Covid-19 virus building sites is also locked-down.

For a year starting on February 15, the entity has sought an exemption from payment of interest on external development charges and internal development charges. It has also stated that the phase of the required approvals for the construction of a project must be conducted with urgency without the requirement of Bank Guarantee(s) and other charges.

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Finance Minister Nirmala Sitharaman today introduced a new discretionary personal income tax regime and unveiled a multibillion-dollar farm, infra and healthcare package to boost the country’s economy. Emphasizing capacity building and empowering oppressed sections of the society while preserving the creators of wealth, Sitharaman said this budget would improve people’s income and purchasing power. Finance minister also increased insurance coverage from Rs 1 lakh to Rs 5 lakh for bank depositors. 

Here are the significant points from Nirmala Sitharaman’s Budget Speech:

Updated Tax Slabs:

1) New optional tax slabs: New income tax slabs will be available for those who forgo exemptions.

2) To simplify the tax system and lower tax rates, around 70 of more than 100 income tax deductions and exemptions have been removed.

3) Dividend Distribution Tax (DDT) abolished: Companies will not be required to pay DDT; dividend to be taxed only at the hands of recipients, at applicable rates.

4) Cash reward system envisaged incentivising customers to seek invoice.

5) 15% concessional tax rate for new power generation companies.

6) Tax on cooperative societies reduced to 22% without exemptions.

7)100% tax concession to sovereign wealth funds on investment in infrastructure projects.

8) Tax on Cooperative societies to be reduced to 22 per cent plus surcharge and cess, as against 30 per cent at present.

9)To end tax harassment, new taxpayer charter to be instituted. Tax harassment will not be tolerated, says FM.

10) Proposes to amend the Companies Act to bring criminal liability in certain areas.

11) To amend I-T Act to allow faceless appeals.

12) To launch new direct tax dispute settlement scheme — Vivaad se Vishwaas scheme.

13) Interest and penalty will be waived for those who wish to pay the disputed amount till March 31.

14) Government to look at ensuring that contracts are honoured.

15) Proposes new National Policy on Official Statistics to improve data collection and dissemination with the help of technology.

Rules of origin requirements in Customs Act to be reviewed, to ensure FTAs are aligned with the conscious direction of our policy: FM

16) Aadhaar-based verification of taxpayers is being introduced to weed out dummy or non-existent units; instant online allotment of PAN on the basis of Aadhaar.

17) Registration of charity institutions to be made completely electronic, donations made to be pre-filled in IT return form to claim exemptions for donations easily.

Affordable Housing:

Tax holiday for affordable housing extended by 1 year. Additional deduction up to Rs. 1.5 lakhs for interest paid on loans taken for an affordable house extended till 31st March, 2021.

Investment:

1) Govt plans to sell part of its holding in Life Insurance Corporation (LIC) by way of Initial Public Offering.

2) Certain specified categories of government securities will be open fully for NRIs, apart from being open to domestic investors.

3) FPI limit in corporate bonds raised to 15% from 9%.

4) Government doubles divestment target for the next fiscal at Rs 2.1 lakh crore.

5) Expand Exchange Traded Fund by floating a Debt ETF, consisting primarily of govt. securities.

Indirect Tax:

1) Customs duty raised on footwear to 35% from 25% and on furniture goods to 25% from 20%.

2) Excise duty proposed to be raised on Cigarettes and other tobacco products, no change made in the duty rates of bidis.

3) Basic customs duty on imports of news print and light-weight coated paper reduced from 10% to 5%.

4) Customs duty rates revised on electric vehiclesand parts of mobiles.

5) 5% health cess to be imposed on the imports of medical devices, except those exempt from BCD.

6) Lower customs duty on certain inputs and raw materials like fuse, chemicals, and plastics.

7) Higher customs duty on certain goods like auto-parts, chemicals, etc. which are also being made domestically.

Startups & MSME:

1) Tax burden on employees due to tax on ESOPs to be deferred by five years or till they leave the company or when they sell, whichever is earliest.

2) New Simplified return for GST from April 2020

3) Start-ups with turnover up to Rs. 100 crore to enjoy 100% deduction for 3 consecutive assessment years out of 10 years.

4) Turnover threshold for audit of MSMEs to be increased from Rs 1 crore to Rs 5 crore, to those businesses which carry out less than 5% of their business in cash.

5) App-based invoice financing loans product to be launched, to obviate problem of delayed payments and cash flow mismatches for MSMEs.

6) Amendments to be made to enable NBFCs to extend invoice financing to MSMEs.

Fiscal numbers & allocations:

1) FY20 fiscal deficit revised to 3.8% from 3.3% in the current fiscal. For FY21, fiscal target seen at 3.5%.

2) Deviation of 0.5%, consistent with Section 4(3) of FRBM Act.

3) Net market borrowing for FY20 at Rs 4.99 lakh crore; For FY21 it’s pegged at Rs 5.36 lakh crore.

4) Nominal GDP growth for 2020-21 estimated at 10%.

5) Receipts for 2020-21 estimated at Rs 22.46 lakh crore. Expenditure at Rs 30.42 lakh crore.

6) Defence gets Rs 3.37 lakh crore as the defence budget

7) Rs 2.83 lakh crore to be allocated for the 16 Action Points; Rs 1.6 lakh crore allocated to agriculture and irrigation; Rs 1.23 lakh crore for Rural development and Panchayti Raj.

8) Rs 4,400 crore for clean air; Rs 53,700 crore for ST schemes; Rs 85,000 crore for SC, OBCs schemes; Rs 28,600 for women specific schemes; Rs 9,500 crore for senior citizen schemes.

9) Rs 30,757 crore rupees for Union Territory of J&K; Rs 5,958 crore rupees for Union Territory of Ladakh.

Banking:

1) To help bank depositors, government increases depositor insurance to Rs 5 lakh from current Rs 1 lakh.

2) Encourage PSBs to approach capital markets for fund raising.

3) Banking Regulation Act to be amended to strengthen Cooperative banks.

Jobs:

1) National recruitment agency: New common entrance test for non-gazetted government jobs and public sector banks.

2) Special bridge courses to be designed by the Ministries of Health, and Skill Development: To fulfill the demand for teachers, nurses, para-medical staff and care-givers abroad.

3) Urban local bodies to provide internships for young engineers for a period of up to one year.

Infrastructure:

1) 5 new Smart cities to be set up via PPP model.

2) Rs 1.7 lakh crore allocated to transportation.

3) 100 more airports to be set up by 2024 to support UDAN scheme.

4) Accelerated development of highways will be undertaken; Delhi-Mumbai expressway and two other projects to be completed by 2023. Chennai-Bengaluru Expressway to be started.

5) NHAI to monetize 12 lots of highway bundles of over 6,000 km before 2024.

6) Young engineers and management graduates will be roped in for infrastructure projects under Project Preparation Facility.

7) About Rs 22,000 crore already provided for supporting National Infrastructure Pipeline.

8) Investment Clearance Cell to set up through a portal, will provide end-to-end facilitation, support and information on land banks

9) National Logistics Policy will soon be released, creating single window e-logistics market.

Telecom:

1) Rs 6,000 crore for BharatNet programme; Fibre to Home connections under BharatNet will be provided to 1 lakh gram panchayats this year itself

2) New policy for private sector to build Data Centre Parks.

Tourism:

* 5 archaeology sites to be developed for world-class museums

1. Rakhigarhi (Haryana)

2. Hastinapur (Uttar Pradesh)

3. Shivsagar (Assam)

4. Dholavira (Gujarat)

5. Adichanallur (Tamil Nadu)

* Rs 2,500 crore for tourism promotion.

*An Indian Institute of Heritage and Conservation under Ministry of Culture proposed; with the status of a deemed University.

* 4 more museums from across the country to be taken up for renovation and re-curation.

*Rs.3150 crore proposed for Ministry of Culture for 2020-21.

* Maritime museum to be set up at Lothal- the Harrapan age maritime site near Ahmedabad, by Ministry of Shipping.

Energy:

* Expansion of National Gas Grid from 16,200 km to 27,000 km along with reforms to deepen gas markets, enable ease of transactions and transparent price discovery

* Rs 22,000 crore allocated to to power and renewable energy.

* FM urges all states and UTs to replace conventional energy meters by pre-paid smart meters in 3 years, this will give consumers the freedom to choose supplier and rate as per their requirements.

* Advise to shut thermal plants if they don’t meet emission norms.

5 measures for Railways:

*Large solar power capacity to be set up alongside rail tracks, on land owned by Railways

* More Tejas-like trains for tourists.

* 150 new train to be introduced on PPP basis; Four stations will be also be redevelopment with the help of PPP.

* Rs 18,600 crore worth Bengaluru suburban transport project launched; 20% equity will be provided be the Centre.

Education:

* Rs 99,300 crore allocated for education sector, Rs 3,000 crore rupees for skill development

* External commercial borrowings and FDI to be leveraged to improve the education system.

* A medical college to be attached to a district hospital in PPP mode, viability gap funding to be set up for setting up such medical colleges.

* US-like SAT exam to be held in African and Asian countries for benchmarking foreign candidates who wish to Study In India

* Degree-level full-fledged online education programme to be offered by institutes in top 100 in National Institutional Ranking Framework

* New Education Policy to be announced soon.

* To bring in equivalence in the skill sets of the workforce and employers’ standards.

* 150 higher educational institutions to start apprenticeship embedded degree/diploma courses by March 2021.

* To launch 2 new National science scheme

* National Police University and National Forensic Science University proposed for policing science, forensic science, and cyber-forensics.

Agriculture:

Agriculture market needs to be liberalised; govt proposes to handhold farmers, says FM

Comprehensive measures for 100 water-stressed districts being proposed

* PM KUSUM scheme will be expanded to 20 lakh farmers.

Government will help 20 lakh farmers for setting up solar pumps; Farm market will to be liberalized.

Another 15 lakh farmers to be helped to solarise their grid-connected pump sets.

Scheme to enable farmers to set up solar power generation capacity on their fallow/barren lands and to sell it to the grid.

* Supporting states to focus on one product for one district so as to make way for Horticulture to gain momentum.

* Change in incentive scheme for chemical fertilisers. We will encourage balanced use of all fertilizers, a necessary step to change the incentive regime which encourages excessive use of chemical fertilizer

 * Krishi UDAN scheme for agricultural exports on international and national routes. This will also improve value realization in North East and tribal districts.

* Railways will set up Kisan Rail through PPP arrangement, for transportation of perishable goods.

* For better marketing and export, supporting states will focus on one product for one district, so that high focus is given at district level for horticulture to gain momentum

* Zero Budget farming focus of the government.

* MGNREGS to be used to develop fodder farm.

* Jaivik Kheti Portal – online national organic products market to be strengthened.

Livestock:

Milk processing capacity to be doubled to 108 tonne from 53 tonne by 2025.

Artificial insemination to be increased to 70% from the present 30%.

MNREGS to be dovetailed to develop fodder farms.

Foot and Mouth Disease, Brucellosis in cattle and Peste Des Petits ruminants (PPR) in sheep and goat to be eliminated by 2025.

Deen Dayal Antyodaya Yojana – 0.5 crore households mobilized with 58 lakh SHGs for poverty alleviation.

Village Storage Scheme:

* Will further expand on SHGs for alleviation of poverty.

* To be run by the SHGs to provide farmers a good holding capacity and reduce their logistics cost.

* Women, SHGs to regain their position as Dhaanya Lakshmi.

* NABARD to map and geo-tag agri-warehouses, cold storages, reefer van facilities, etc.

* Warehousing in line with Warehouse Development and Regulatory Authority (WDRA) norms:

* Viability Gap Funding for setting up such efficient warehouses at the block/taluk level.

*Food Corporation of India (FCI) and Central Warehousing Corporation (CWC) to undertake such warehouse building.

* Financing on Negotiable Warehousing Receipts (e-NWR) to be integrated with e-NAM.

*State governments who undertake implementation of model laws (issued by the Central government) to be encouraged.

Fisheries:

* Framework for development, management and conservation of marine fishery resources to be put in place.

* Fish production to be raised to 200 lakh tonnes by 2022-23

*Youth and fishery extension work to be enabled by rural youth as Sagar Mitras, forming 500 fish farmer producing organizations.

Sanitation:

* Rs 3.6 lakh crore allocated to water sanitation and pipeline project; Rs 12,300 crore for Swachh Bharat.

* Our government is committed to Open Defecation Free country, in order to sustain ODF behaviour and to ensure no one is left behind.

Healthcare:

* Rs 69,000 crore allocated to healthcare sector.

* Rs. 6400 crore (out of Rs. 69,000 crore) for PM Jan Arogya Yojana (PMJAY):

* Indradhanush immunization plan expanded to cover 12 new diseases.

* Viability gap funding window to be set up to cover hospitals, with priority given to aspirational districts that don’t have hospitals empanelled under Ayushman Bharat.

* Propose Rs 35,600 crore nutrition- ..

* Jan Aushadhi Kendra Scheme to offer 2000 medicines and 300 surgicals in all districts by 2024.

* Over 6 lakh anganwadi workers have been equipped with smartphones to upload the nutrition status of 10 crore households.

* Nominal health cess on import of medical equipment to be introduced to encourage domestic industry and generate resources for health services.

* A new scheme to provide higher insurance cover, reduced premium for small exporters and simplified procedure for claims

Targeting diseases with an appropriately designed preventive regime using Machine Learning and AI.

Other announcements:

Three prominent themes of the Budget:

Aspirational India: Better standards of living with access to health, education and better jobs for all sections of the society. Three components of Aspirational India

a) Agriculture, Irrigation, and Rural Development

b)Wellness, Water, and Sanitation

c) Education and Skills

Economic Development for all: “Sabka Saath , Sabka Vikas , Sabka Vishwas”.

Caring Society: 

* Both humane and compassionate; Antyodaya as an article of faith.

* Provision of Rs 8,000 crore over five years for Quantum Technologies and it’s applications.

* GIFT City to have an International Bullion Exchange, enabling better price discovery of gold

* India will host G20 Presidency in 2022, Rs 100 crore to be allocated for making preparations for this historic occasion, where India will drive global economic agenda

* This is the Budget to boost income and purchasing power of Indians, says Sitharaman.

* This Budget is woven around three prominent themes: Aspirational India; Economic Development for All; A Caring Society

* Proliferation of technologies such as analytics, machine learning, Artificial Intelligence, bioinformatics and number of people in productive age group at its highest, point out two cross-cutting developments.

* Sitharaman cites a poem — Pyara Watan.

* Budget aims to meet hopes and aspirations of all the sections of the society.

* Govt has taken several steps to formalisation of economy.

* Govt wants to improve the life of the people through Rs 100 lakh crore infrastructure pipeline projects.

*FM terms GST as historic structural reform; says it integrated country economically

* GST has resulted in efficiency gains in transport and logistics sector, inspector raj has vanished, it has benefitted MSME Consumers who have got a annual benefit of Rs 1 lakh crore by GST.

* 6 million new taxpayers have been added.

* Average household now saves nearly 4% more on the monthly basis after implementation of GST.

* Govt says aim is to achieve seamless delivery of services through digital governance.

* GST resulted in Rs 1 lakh crore gains to consumers, removed inspector raj and helped transport sector.

* India uplifted 271 million people out of poverty.

* India is now 5th largest economy in world.Central Govt debt reduced to 48.7% of GDP from 52.2 per cent in March 2014

* We shall strive to bring ease of living for every citizen.

* 7.4% growth surpassed in 2014-19 with average inflation of 4.5%.

* Centre’s debt down from 52.2% in 2014 to 48.7% in 2019

*During 2014-19, govt brought paradigm shift in governance.

* Fundamentals of the economy strong, inflation well contained, banks cleaned up accumulated loans.

*Finance Minister lists out welfare schemes like affordable housing scheme, DBT and Ayushman Bharat

Source: Economic Times

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The Forum for People’s Collective Efforts (FPCE) lobby of homebuyers requested involvement by Prime Minister Narendra Modi to avoid any attempt to prevent homebuyers from moving the National Company Law Tribunal (NCLT) against errant builders.

Last year the Government implemented the Insolvency & Bankruptcy Code to consider homebuyers as financial creditors and authorize them, in compliance with Section 7 of the Code, to initiate a corporate insolvency resolution process against the defaulting promoters. This status was challenged by a group of developers in the Supreme Court. In August the Apex Court, however, dismissed the claim that the amendment was constitutionally valid.

“Real estate developers are trying to thwart whatever steps the government is taking to encourage home buyers and introduce reforms in the industry. They had challenged but failed to achieve the RERA’s constitutional validity,” said the FPCE in a letter to the Prime Minister.

This letter was also sent to Minister of Finance Nirmala Sitharaman, Injeti Srinivas, Secretary, Ministry of corporate affairs and M. S. Sahoo, Chairperson, Insolvency and Bankruptcy Board of India (IBBI), the insolvency regulator.

“What worries the builders about the forums in which it could be used, as they would be able to present themselves and prove their innocence? Why insist only on RERA if both could co-exist in the Apex Court itself?” asked FPCE President Abhay Upadhyay. “Do not ignore the amendment itself was brought about by an order of the Supreme Court, by which homebuyers were included in Jaypee Infratech’s Creditors Committee.”

FPCE pointed out that last year’s amendment to the insolvency code was made in the wake of several cases in which builders such as Amrapali and Jaypee Infratech declared insolvency and affected thousands of homebuyers who were left without any recourse to insolvency proceedings under IBC.

Interestingly, homebuyers have already called for RERA authorities to keep track of their activities within the scope of the Central Vigilance Commission (CVC). They also proposed that all RERA orders be audited by the Comptroller Auditor General of India (CAG) in order to continue to track compliance with RERA provisions.

Tarun Jindal, Secretary of the Discovery Park Buyer’s Welfare Association, Faridabad, said, “It is certain, that construction companies have become more comfortable at RERA, while the fear of NCLT is visible and that they are pushing for its issues to be taken up by RERA and do not wish IBC to interfere in it. Hopefully, the government is not succumbing to the pressure from builders and continues empowering homebuyers as it has done both via IBC and RERA.

According to homebuyers, it is unreasonable to ask that the accused be not brought to court before his victim identifies other victims and calls out to become eligible to present a court. Moreover, real estate is not the only industry that has a regulator; other regulators, such as RBI, IRDAI, TRAI, SEBI etc., have not made such demands by corporations that fall under those regulators.

“Through IBC, a single creditor (operational/economic) whose debt is Rs 1 lakh or higher, may bring a company into NCLT, How can one house buyer whose financial stakes would outweigh this amount several times more, be barred?” the letter asked.

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In order to reactivate the main industry, also to boost the economy and to provide aid to home buyers, the cabinet approved Rs 25,000-crore special windows to finance housing projects that are stalled. The money will be available for projects that are “net worth positive,” FM Nirmala Sitharaman said.

There will be potential distribution to include as many as 1,600 projects with 458,000 housing units. In addition to sovereign wealth funds and pension funds, the Government will contribute Rs 10,000 crore and the rest is from LIC and the State Bank of India.

The formation of a special window for affordable and medium-income housing projects may revive the real estate sector and creates substantial employment.

In a release, the government said that this would generate jobs and increase demand for cement, iron and steel. “This move will also have a positive impact on other key sectors of the Indian economy in releasing pressure”. Sitharaman said that an SBI Caps account will be formed to manage projects and release funds.

Incomplete housing units of less than Rs 2 crore in Mumbai; less than Rs 1.5 crore in Delhi-NCR, Chennai, Kolkata, Bengaluru and Pune; and under Rs 1 crore in other parts of the country will be eligible. Sitharaman said, “There is now relief for all those projects within the categories of affordable and middle income.”

Issuance of Clarificatory Note by the RBI:

After a cabinet meeting chaired by PM Narendra Modi on Wednesday, Sitharaman spoke to journalists.

“This will eventually help to alleviate the financial stress that many middle-class home buyers have faced, who have invested their hard-earned money,” the government said.

Sitharaman said that any project, regardless of the completion phase, shall be eligible if it is of net worth positive and has a Real Estate (Regulation and Development) Act or Rera registration.

The government had addressed the non-performing assets (NPAs) in depth with banks and the Reserve Bank of India (RBI). “On this matter, the central bank will issue a clarificatory not,” she said.

On 14 September Sitharaman announced the fund but was limited to granting last-mile funding for projects that aren’t in the bankruptcy court or have already been listed as bad debt. Following extensive consultations with builders and homebuyers, the conditions are now been relaxed, she said.

A government official said the total value of the stuck houses is estimated to be Rs 1.39 lakh crore, and it will require around Rs Rs 55,000-Rs 80,000 crore for the completion.

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On Tuesday, Finance Minister Nirmala Sitharaman flagged concerns about the real estate sector problems, saying that much attention is needed in the ailing industry.

“The Indian Government is extremely committed to and works with RBI to see how best we can change existing legislation, where it is required, and assist the people in this particular sector (real estate), which until now has not been fully addressed,” Sitharaman said at a 25-year NSE function. She said the industry had a stock-market cause and effect.

“We must say that there are alternative funds which are now coming to us saying that, while there is some support mechanism available to revive the real estate sector, we want to do something with you,” she added.

“The real estate sector needs much more attention because it needs to address the drowsiness that prevails,” she pointed out. Sitharaman stated that India needs a vibrant stock market, and marking November 3 as retail investors’ day is a good step because it fetches more retail participation in the market.

Ajay Tyagi, Chairman of the Securities and Exchange Board of India (Sebi), said at the same event that Indian capital markets are on an exciting trip.

Further, he added, Capital markets ‘ depth was an indicator of a country’s economic growth. Tyagi said that while it is important to do business with ease, protection of investors is equally important.

NSE Managing Director and Chief Executive Officer Vikram Limaye said that India has grown into an attractive investment destination over the years. In order to increase market competition, he urged the Minister of Finance and the Sebi to examine the security transaction costs.

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India’s apex realtors group has been disappointed with the government’s support measures to the industry since it has been unsuccessful on important requirements for house buyers and builders such as tax rebates and reduced interest rates.

According to Jaxay Shah, CREDAI’s National Chairman, the Fund established to complete the stalled estate projects will have little impact, as it excludes those projects which are either in the face of insolvency proceedings or are in non-performing assets (NPAs).

“We met the Finance Minister last month and created several demands for liquidity and demand boosting in the real estate sector, but our demands were sadly not fulfilled,” Shah said Sunday to PTI.

Reiterating the association’s demand for approximately 12,000 members, Shah said the government should revoke its decision of prohibition of the subsidy scheme as it was in favour of home buyers and helped to produce demand.

In July the National Housing Bank (NHB) asked housing finance companies (HFCs) to “do not” grant subsidy loans whereby developers pay interest on home loans on behalf of the home buyers until the buyer gets the possession of flats.

In response to the additional deduction of Rs 1.5 lakh on home loans, the Chairman of Credai said the government must remove the unit price cap of Rs 45 lakh.

In this year’s budget, the government allowed an additional deduction of up to Rs 1.5 lakh for interest paid on loans borrowed for the purchase of an affordable house valued up to Rs 45 lakh until March 31, 2020. This additional deduction was already allowed under the Income Tax Law above and beyond Rs 2 lakh.

Shah said the interest rate on affordable housing should be reduced for both house buyers and builders, and the need to lower capital gain tax should also be stressed.

Finance Minister Nirmala Sitharaman announced on Saturday that a special window will be drawn up by the government to provide last-mile funding for non-NPA and non-NCLT housing projects in the affordable and middle-income bracket. In the fund, the central government will contribute Rs 10,000 crore and approximately the same amount will come from outside investors.

External commercial borrowing (ECB) standards for affordable housing have been loosened and house building advance at reduced interest rates will be given to the government employee.

“With the recent announcement, the government has just scratched the surface tip. They don’t realize the gravity of the scenario,” Shah said after the package was announced on Saturday. He said industry expects more from the government to increase the sector that offers millions of job opportunities. Shah also said that fulfilling the goal of ‘Housing for All by 2022’ would become “challenging” if the necessary policy reforms were not announced.

CREDAI President Satish Magar called the announcement by the government a “half-hearted attempt” to restore ailing real estate sector. He said it required bold decisions to support revive the collapsing real estate industry.

The announcement by the government was “disappointing” not only to the industry but also to the lakhs of individuals working in the real estate sector, Magar said.

The president of CREDAI said that the government should “function to resolve the root cause rather than merely announce piecemeal changes that will not have a concrete long-term effect.”

However, Sanjay Dutt, MD & CEO, Tata Realty & Infrastructure, said the government’s decision to provide the affordable and middle-class housing sector with the much-needed last-mile liquidity is a piece of favourable news for the industry.

“This funding for non-NPA and non-NCLT projects would not only arrest the rise in NPA’s but also reduce the overall NCLT & RERA complaints, thus providing customer relief and helping to restore trust in the housing sector,” he said.

Dutt said the residential industry needs more than Rs 3 lakh crore financing and this decision is the first move towards infusing liquidity into the industry.

“We are also hoping that the government will announce steps over the moment to stimulate job creation and confidence, thereby improving sentiments,” he added.

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Finance Minister Nirmala Sitharaman announced Rs 10,000 crore special window to support for last-mile funding of non-NPA and non-NCLT housing projects on September 14. Incompleted projects of almost 3.5 lakh units throughout the nation will be relieved.

The FM said at the fourth such conference since mid-August it announced initiatives to increase ailing economies, “That it will provide last-mile financing to housing projects that are non-NPA or non-NCLT projects and are networth beneficial in the affordable and middle-income housing bracket will be set up.”

She said the objective is to concentrate on the construction of incomplete units which are around 3.5 lakh. “The Fund’s scope would be Rs10,000 crore, and the Indian Government would contribute to it, with external investors making about the same contribution,” she said.

The government of India on the NIIF lines can assist the fund while the other investors will be LIC and other organizations and private capital from banks, sovereign funds and DFIs’, she said.

The fund will be established as an AIF Trust of category II and will be professionally managed by household and banking sector experts, she said. Previously the FM had indicated that homebuyers would receive some relief.

“We consulted homebuyers who paid their advances and sat without understanding what to do and developers that are sitting without funds to further their projects,” FM said before.

The Minister of Housing and Urban Affairs, Hardeep Singh Puri, also stated that thanks to Supreme Court action, the remediation would be done in the three major real estate projects in Delhi-NCR – Unitech, Amrapali and Jaypee.

According to Anarock, NCR has 67 projects, covering a total value of Rs 82,200 crore, the biggest stack of stalled units with 1.18 lakh homes (68% of the total stuck stock). Almost 69% (or 83,470 units) of this is already sold out.

On 11 August, during a meeting with Minister of Finance Nirmala Sitharaman, realtors apex bodies CREDAI and NAREDCO expressed their worry that after the IL&FS crisis liquidity situation has deteriorated.

The Forum for Peoples Collective Efforts (FPCE) said previously in a separate meeting with the Minister of Finance that five lakh home buyers are stuck in several housing projects across the nation. They had requested the establishment of a Rs 10,000 crore stress fund to finish such projects and provide relief to these homebuyers.

On 23 August, the minister of finance, Nirmala Sitharaman, announced that HFCs will get Rs 20,000 crore additional liquidity from the National Housing Bank and that she will shortly be making a notification for the real estate sector, even for the projects stalled.

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Minister of State for Finance Anurag Thakur said the government will quickly follow up with its next set of relief measures, this time for the real estate industry.

For multiple factors, including tight liquidity, many builders default, and high property costs, the real estate industry is facing a multi-year slowdown in demand. “The next set of relief measures might be for the real estate industry. Next week, an announcement will come,” Thakur said.

Minister of Finance Nirmala Sitharaman announced on 23 August a set of measures to resuscitate the flagging economy. This included easing regulations on overseas investment, vehicle purchases concessions, and promoting banks to cheaper lending for growth from the spur five-year low.

Thakur also pointed out that the automobile sector has been raising issues concerning the goods and services tax (GST).

“The government is open-minded to listen to industry and taking fast decisions. We will have to look at the other slowdown factors with regard to GST before taking any call,” said Thakur.

Apparently, subdued demand had struck all industries hard. In the middle of one of its worst crises is the automobile sector. The country’s sales of passenger vehicles decreased in April, May, June and July respectively by 17.07%, 20.55%, 17.54% and 31%.

One of India’s most significant factors in the fall of automotive sales was a constant liquidity crunch that could result in more than one million job losses.

The crash of IL&FS by end-2018 resulted in a substantial reduction in the lending of Non-banking finance companies (NBFCs) or shadow banks.

Slowing demand has gone beyond discretionary purchases, with fast-moving consumer goods (FMCG) firms producing soaps, biscuits and other daily essential items reporting gloomy consumer feelings.

India’s gross domestic product (GDP) rose by 5% in April-June 2019, formal data published on August 30 revealed, buffeted by poor household expenditure and shortened corporate investment. In the same quarter of 2018-19, GDP growth was 8%.

The RBI lowered interest rates by 110 basis points this year to increase loans and restart investment in order to tide over a cash crunch in the banking sector.

Following this, the finance minister announced the government’s decision to inject Rs 70,000 crore immediately to recapitalize and encourage state-run banks to lend.

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All banks have been obliged to link floating rates loan extended to retail and small businesses to the repo rate at which the lenders borrow from the RBI-or the Treasury bill rates from October 2019. The move comes in the days after banks in the public sector declared a slew of repo-linked loans after a nudge from Minister of Finance Nirmala Sitharaman.

In a circular for all banks, RBI said that floating rates of housing loans, auto loans and other personal advances, as well as micro and small businesses, must be linked to one of 3 external benchmarks, instead of the Marginal Cost of Lending Rate (MCLR).

Three of these include the RBI repo rate, three or six months of Treasury bill yields or any benchmark rate given by the FBIL, a money market service provider which publish debt market rates.

SBI was the first to give repo-linked home loans and deposits. The lenders included, among others, the IDBI Bank, Bank of India, Union Bank of India, Central Bank of India, United Bank of India, and the Allahabad Bank. Many lenders also offer repo-linked saving deposits.

RBI said that current loans and credit limits related to the MCLR /Base Rate /prime lending rate will persist until repayment or renewal, as the situation may be. Customers wishing to move to the repo-linked rate may do so under ‘mutually appropriate conditions.’

The argument against the present benchmark-the MCLR-was that the rate reduction announced by RBI to borrowers was not efficiently transferred.

RBI, while announcing a 35 basis points (100bps=1%) reduction in the repo in its August policy, pointed out that while it had reduced the rates by 75 basis points, banks weighted average MCLR had fallen by just 29 basis points.

Banks had asserted that the formula of the MCLR is calculated on the basis of funds costs, and these only gradually decrease after a reduction in the repo rate.

The repo efficacy as a benchmark rate was proved in SBI’s repo-rate linked home loan, which is priced at 8.05%, significantly lesser than the home loan associated with the MCLR. There is a powerful probability that RBI will cut rates further to spur demand with the economy in the throes of a slowdown.

Former Governor Urjit Patel first proposed the external benchmark in 2018. Banks objected to the external benchmark on the basis that their funding costs did not pass in line with the economies which the order, that was due to come into force in April 2019, was held in abeyance.

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