By: Ravi Sinha
Real Estate and Finance Minister seem to be at logger heads over the wants and needs of the sector. Interestingly when one proposes and the other disposes, both of them justify their stand in the name of “Aaam Aadmi”, the common man who is the consumer and the end-user. But in this cacophony of confusion the “Aaam Aadmi” is often found wondering as to who will ask for his wish list with Union Budget. Unfortunately, this common man finds very many voices representing his wish list and nobody actually bothers to ask him.
Track2Realty made an attempt to reach to this “Aaam Aadmi” and find out as to what is his wish list with regard to his dream of having a house in the city of Mumbai. Devendra Patil, a young professional is planning to buy a house in one of the suburbs of Mumbai. While the EMI that he will have to pay is far exceeding the house rent that he is now paying, he is not sure whether there will actually some benefit coming out of the home loan deduction that is on offer now.
“I want the Finance Minister to increase the deduction benefit on interest on housing loan from existing 1,50,000 to 3,00,000. Also it will be of great help if there is an increase in the deduction u/s 80C for repayment of housing loan,” he says.
Amit Shah, a bank employee has a similar concern that if they can’t get tax benefits, buying a house can make the living difficult for the family of four in a costly city like Mumbai. He asserts that the current tax shields of Rs 1.5 lakhs on interest and Rs. 1 lakh on principal amount p.a. are not adequate. His primary demand is to enhance it to at-least twice as much.
“The Finance Minister must do it, may be with a government rider allowing interest amount to be enhanced in line with the growth in interest rates based on periodic revision in the RBI policy rates. This would provide relief to genuine end users who are now faced with not only higher interest rates but also runaway inflation on household expenses– which has eaten into investible surplus and savings rates.”
Devendra and Amit are not alone in the city of Mumbai who is wondering whether the government is sensitive to the needs of the home seekers in the lower and mid income range. Sonal Shah, a house wife is looking for a house in Khar. Her demand is availability and accessibility to cheaper finance and incentive to home buyers particularly in LIG and MIG segment. “In the past 6 months, the home loan rates have gone up substantially and it is expected that it will further go up. In this scenario if government will not give the incentive to the home buyer, the budget makes no sense to me,” she quips.
Priyanka Manjari, a software professional living in a rented house in western suburbs of Borivali wonders whether the government is actually sensitive to the needs of the middle class. She also questions the rationale of same taxation to both the first time as well as second time home buyers. Her demand with the Pranab Mukherjee’s Pandora box is simple-more tax benefit for the first-time home buyers, who are actually the needy ones.
“The Government must allow subsidized interest rate for first time home buyers. Government should simplify tax procedures as this will simplify transaction costs like stamp duty. There should not be a standard deduction for someone buying an LIG, MIG and one buying a luxury house. By imposing a bit more tax on second home buyers who don’t necessarily need that, and those who can afford while purchasing luxury house, there can be a tax concession and much needed relief to the first time buyers who are the needy ones,” she suggests.
However, those who are having more than one house in Mumbai have their own set of wish lists. They demand Remove ceiling on number of houses to be held by one person. “All income earned on renting of properties up to 1500 sq ft to be tax free,” demands Naveen Jaiswal in the Central Suburbs of Parel.
Whether it is the first time buyer or the second time, everybody in Mumbai is unanimous that the Finance Minister should consider that the tax payers should get incentives for buying homes. Mumbai residents also question that rational of tax exemption on house buying to be the same across the country. “The limit should be different to different cities, since an affordable house at Rs 20 lakh might be a reality in many of the cities, but not in Mumbai,” says Rajesh Kamboj who is on house hunting in Mumbai suburbs for the last three years.
