While the realty sector is cribbing for under representation in budget for the last few years, Atul Modak, Head of Mumbai-based Kohinoor City goes a step further to say realty sector not only gets under represented but also it is treated with a bias. He asserts that instead of seeing it as one of the sector responsible for growth of the economy, it is looked with a bias and taxed accordingly. In an interview with Ravi Sinha, he shares his budget wish list and concerns for the sector. Excerpts of the interview:
What is your budget wish list?
Abolition of service tax on construction activity by the developer as there is no service in it. As contractors, architects, legal advisors and other service providers are already paying service taxes and ultimately are borne by the developers, service tax on construction activity by developer results into double taxation and increase in cost of construction. I also wish that the Finance Minister increases the deduction benefit on interest on housing loan from existing Rs. 1, 50,000 to Rs. 3, 00,000. There should be increase to the deduction u/s. 80C for repayment of housing loan. Reduction in excise duty on steel, RMC, cement to reduce the construction cost and to promote redevelopment of old and dilapidated buildings more than 50 years old, tax benefits/concessions should be given to the developers.
What are the issues the affect the sector in the budget?
Various taxes like service tax, excise duty, income tax deductions on housing loans directly affect both the home seekers and developers as it results into increased cost of construction.
What are the issues that Finance Minister should consider for the end-users?
For calculation of capital gains, year 1981 is used as base year which should be moved to year 2001. Even various deductions under capital gains should be simplified by relaxing various conditions. By abolishing service tax on construction activity to developers and rationalization of excise duty on steel, cement, RMC, etc cost of construction will come down. This benefit then can be passed on to the final customer. By giving benefits in direct taxes by way of various deduction in income tax, end users will be benefitted by taking housing loan and enjoy tax benefits.
Have you given any memorandum or presentation to the Finance Minister?
No, not met personally.
Do you think realty sector gets under represented in every budget?
I think realty sector not only gets under represented but also it is treated with a bias. Instead of seeing it as one of the sector responsible for growth of the economy, it is looked with a bias and taxed accordingly.
