Grant industry status to the real estate sector’

JC. Sharma, Vice Chairman and Managing Director of Sobha Developers, says the government should come out with a policy through which income tax benefits are passed to developers who build affordable homes.

Given the current challenges, what, in your opinion, would make for a good   budget ? What measures or proposals would you like to see?

The government should focus on reducing its current account deficit, broaden its tax base and direct expenditure in a more productive manner. There should be rationalisation and optimisation of government resources. The budget should also help control inflationary tendencies.  

Given the constraints the government faces in raising revenue, do you see a case to increase income tax rates on the rich?  

There are some countries in the Middle East that do not have an income tax system and are still prosperous. So, with a very narrow tax base, the idea of taxing the rich in India is very symbolic.  

Please identify the cut-off in income beyond which you would classify the person as rich.

If need be, the rich should be prepared to pay five per cent more tax on an income of Rs 5 crore and above. But the government, in any case, must take steps to widen its tax base instead of increasing the tax outflow from existing taxpayers.  

If the budget does not meet expectations, do you fear that business sentiment would once again dip?

I don’t think so. The business sentiment is in sync with the overall economic sentiment. If you look at the macro level, everyone gets affected in some way or the other. While we as corporates may be constrained, it doesn’t prevent us from working harder to meet the expectations of our stakeholders like our customers, investors, employees etc.  Please note: India has ample scope to grow as it needs huge investments and has a great appetite for consumption.  

Specific to your sector, what could the current budget do to improve conditions?

An important breakthrough will be the introduction of the goods and services tax (GST). We also want the government to come out with a policy through which income tax benefits are passed to developers who build   affordable homes . To benefit consumers, the government should raise the income tax exemption limit from Rs 1.5 lakh to Rs 5 lakh for home buyers.  

The budget must consider the fact that the Indian real estate sector generates countless jobs across its various verticals. By granting it industry status, the government would enable the sector to access debt lending at better interest rates and reduced collateral values. We would also like to have simple laws related to service tax. We hope the finance minister will rationalise taxes. The budget should enable a broader scope for external commercial borrowings for real estate and provide a general relaxation of financing norms.

Which budget, in the recent past, do you remember as having been a good one?

We have not had any dream budget in the recent past. While all budgets try to address the government’s concern to reduce the fiscal deficit and bring the economy on a steady growth path, the fact remains that our GDP (gross domestic product) growth is sliding and this needs to be checked on a priority basis.