Citizens' Issues
For realty, mass-housing sops, tax cuts hold key for budget
With a focus on strengthening the economy, improving the investment climate with more public spending, boosting infrastructure and spurring demand and growth, the government may have little fiscal room in the national budget for the next fiscal for measures that specifically help the realty sector. But what will still hold the key for the annual exercise, due this time on February 29, is incentives for affordable housing and tax benefits.
 
The government is quite serious about its flagship programme, "Housing for All by 2022", under which five crore new houses are to be built to meet the housing shortage. And since most of the shortage is in low-cost and affordable category, it holds the key to the success of the programme. The government realises it well and the real estate sector expects some kind of incentives/tax relief to boost low cost affordable housing of carpet area up to 90 sq mts in non metros and up to 60 sq mts in metros.
 
Ahead of the budget, the housing and urban poverty alleviation ministry has sanctioned construction of over 81,000 houses for economically weaker sections (EWS) across 163 cities and towns for Rs.4,076 crore ($590 million). In last year's budget EWS was brought under corporate social responsibility (CSR) with a tax waiver, besides allocating Rs.4,000 crore for the National Housing Bank to promote affordable housing. 
 
But unlike last year, this time, it is expected of the government to come up with a policy prescription to boost rental housing to tackle the massive housing shortage. The industry also expects the government to announce priority sector lending for affordable housing costing Rs.25 lakh for small and medium cities, Rs.35 lakh for metropolitan cities and Rs.50 lakh for mega cities. 
 
Considering the focus on "Make in India", it is expected that the government will rectify its flawed SEZ policy by effecting a cut in minimum alternate tax (MAT) for special economic zone (SEZ) units that are into manufacturing and with reduction in MAT fur SEZ developers.
 
For the last over two years, real estate has been facing a slowdown.Though commercial real estate is well on the recovery path, residential real estate is still struggling with huge unsold inventories. Though because of tepid sales, prices have more or less become stagnant or seen a marginal decline, yet property buyers find homes unaffordable, particularly when home loan rates are still high.
 
Last year, the Reserve Bank of India (RBI) effected a total of 100 basis points of interest rate cuts to provide momentum to housing market but the banks passed on only a part of this to consumers, with the result that it hardly had any worthwhile impact on sales. 
 
Another significant factor that was responsible for holding back home buyers was massive delivery defaults with long delays, badly shaking consumers' confidence. Though the industry is demanding substantial interest rate cuts to provide a fillip to housing market, considering that the RBI has little leg room tn this regard, one does not expect any relief on this front.
 
In this backdrop, the sector is pinning hopes on tax benefits for home loans like increasing home loan principal repayment exemption limit from Rs.1.5 lakh to at least Rs.2 lakh and increasing deduction limits on home loan interest from Rs.2 lakh to Rs.3 lakh for self-occupied property. In the 2014 budget, this limit was raised by Rs.50,000.
 
There is also a case for mortgage reforms to fully avail these tax benefits. Under the current rules, tax benefits can be availed by home loan takers only after they get possession of their homes. But considering long delays in delivery of homes, real estate developers are seeking an amendment to avail tax benefits from the time home buyers take loans.
 
Fund scarcity has played havoc with the sector, especially by way of long delays in project completion because of which developers have lost the confidence of property buyers and investors. To channelise big time domestic and global investment, the government in the last budget made real estate investment trusts (REITs) functional which could also mobilise huge retail investment because investments in REITs are quite low compared to physical real estate besides being more liquid, regulated and safe.
 
But despite that, REITs have failed to take off due to unattractive tax structure. In view of this, industry's demand to make tax structure attractive to make REITs functional is justified. In this year's budget, the real estate sector is demanding exemption for dividend distribution tax (DDT) -- a major hurdle before REITs to take off, besides exemption in stamp duty. 
 
Though it's highly unlikely that the government will exempt stamp duty, yet one may expect waiving off of DDT to pave the way for REITs to take off. In order to expand the funding basket, the sector has sought ECB in all spheres of housing and real estate particularly under-construction projects. 
 
One of the oldest demands of real estate, which which is part of this year's budget wishlist as well, is easy and cheap bank funding for the sector. And to facilitate that, the apex real estate industry bodies are demanding industry status for the sector. But considering the poor financial health of banks, easy and cheap bank funding looks far fetched.
 
Over the last few years, the affordability of real estate has been badly hit due to rising inflation and property prices amidst worsening job market with salary freezes or nominal hikes, resulting in decline in disposable income. While the implementation of the Seventh Pay Commission report will considerably boost disposable income of government sector employees, in this year's budget, the government may well hike the personal income tax limit by about Rs.50,000 to ensure more disposable income in the hands of private sector employees to spur home buying. 
 
To boost affordability, it is also expected that the government will carry forward its process of ease of doing business by announcing policy initiatives to do away with cumbersome and time consuming approval processes that result in cost escalation, especially when crucial reform legislation like the GST Bill, Land Acquitsition Bill, Real Estate Regulation & Development Bill are stuck in parliament.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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Dilip Kumar acquitted in cheque bouncing case
Mumbai : A Mumbai court on Tuesday acquitted veteran Bollywood actor Dilip Kumar from alleged involvement in an 18-year-old cheque bouncing case.
 
Dilip Kumar, 94, was not present in the court when the matter came up for hearing before 14th Court Metropolitan Magistrate B.S. Kharade.
 
The case dates back to 1998 when the actor was the honorary chairman of an export company, Geekay Exim India Ltd, which subsequently defaulted on repayments.
 
The company had raised loans of millions of rupees from people across India and later issued cheques for repayment of the outstandings.
 
However, some cheques allegedly were dishonoured by the banks and court cases were filed for default against all the top officials of the company, Dilip Kumar and four others.
 
Though Dilip Kumar was not directly concerned about the day-to-day affairs of the company, he continued to fight all the cases, including the last one in which he secured acquittal on Tuesday.
 
He was granted relief in all other similar cases against the company on the same grounds, barring one.
 
According to section 141 of the Negotiable Instruments Act, the complainant must prove that the accused was involved in the day-to-day functioning of the company. Since that was not proved, Magistrate Kharade acquitted Dilip Kumar.
 
Incidentally, on Monday, Dilip Kumar's wife and former actress Saira Banu expressed concerns over her husband's fragile health and requested his fans to pray that "the stress-related to the 18-year old case" should not further affect him.
 
"At 94 yrs, Saab's health is delicate, facing neurological problems, yet Saab has never prayed for case adjournment..."
 
"Hope serious consternation n stress caused don't affect his condition further. Saab needs peace n rest. I seek your prayers n support."
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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Mamata's playing with fire on illegal Bangladeshi immigrants
A dangerous situation may arise in the country if Mamata Banerjee's demand for granting citizenship to Bangladeshi immigrants living in India for more than five years is conceded.
 
The West Bengal chief minister has called for restoration of the district magistrates' former rights to grant citizenship which, in effect, may facilitate further immigration from Bangladesh.
 
The situation in West Bengal is so grim that as early as in the 1980s T.V. Rajeswar, a former IB director and former governor of the state, was forced to write in a mass circulation daily cautioning against heavy infiltration from Bangladesh.
 
His article averred that in the 1981 census the total population growth rate for West Bengal was 23.2 percent while that of the minority community was 29.6 percent. In the same census the overall yearly population growth of the state was 2.3 percent. But in the districts bordering Bangladesh the figures were higher: 2.7 percent in 24 Parganas, 3.3 percent in Nadia, 2.55 percent in Murshidabad, and 2.66 percent in both Malda and Jalpaiguri.
 
The same pattern continued in the 1991 census. The average population growth rate of West Bengal was 24.73 percent - quite an abnormally high figure. But the districts bordering Bangladesh showed even higher figures: North Dinajpore (34 percent), North 24 Parganas (31.69 percent), South 24 Parganas (30.24 percent), Murshidabad (28.20 percent) and Nadia (29.95 percent). This proved that illegal immigration from Bangladesh was continuing. It is continuing unchecked even today.
 
The issue is sensitive and must be handled with statesmanship. Banerjee is playing this card a bit rashly with an eye on the coming election as she has reasons to be somewhat worried about a probable Left Front-Congress electoral understanding. But she has picked up the right point from this complicated maze of population movement.
 
Although Rajeswar had mentioned the abnormal rise of minority population in the 1981 census, he had missed one vital point: exodus of the Hindus from Bangladesh since the birth of that nation. The hard truth is that both Hindus and Muslims are emigrating from Bangladesh to India and there is no point in giving it a communal character.
 
The only logical reason behind Banerjee's demand for granting citizenship to illegal Bangladeshi immigrants may be her fright that a significant quantum of votes which the BJP could garner in the last parliamentary election may be transferred this time to either the Left or the Congress.
 
In the last municipality elections, the BJP's share of votes had dwindled by about 50 percent and this portion had found its way to the Left kitty. As most of these municipalities are situated in the Indo-Bangladesh border areas, playing the "citizenship for the immigrants" card may have temptations.
 
It is likely that the BJP, too, will lap up this issue. During the last parliamentary poll campaign, Narendra Modi held out promises in this regard. Some time back Rajnath Singh, the union home minister, had lamented about the centre's inability on the issue as the BJP does not enjoy a majority in the Rajya Sabha.
 
The issue has now become a double edged weapon. On the one hand, voting patterns in large numbers of constituencies in 24 Parganas (North) , 24 Parganas (South), Kolkata, Nadia and several districts of north Bengal may be affected by majoritarian sentiments arising out of the issue. On the other hand. the minority community can also influence results in 60-odd constituencies.
 
West Bengal is now sitting on a powder keg and no one should try to disturb the fragile equilibrium that is still holding the social fabric together. There is no point in crying over Muslim immigration from Bangladesh. Hindus are also coming. In 1951, East Pakistan, now Bangladesh, had 22 percent Hindus. Now the number has come down to a mere seven percent. Where are they going ? The natural answer is India.
 
Moreover, Bangladesh being a Muslim majority country, it is but natural that there will be a considerable number of Muslims among the emigrants. Trying to give a communal colour to it will be unjust.
 
In 1951, West Bengal's population had 79.40 percent Hindus and 18.63 percent Muslims. In 1981 the number of Hindus decreased to 77.10 percent while that of the Muslims increased up to 21.55 percent. In 2001, the share of the Hindus in the total population further came down to 72.90 percent, but the Muslims' share jumped upto 25.37 percent.
 
As per the 2011 census, Hindus now constitute 72.5 percent of the population of the state. No doubt it shows a decline. This declining trend is noticeable in the minority community's share of the total population also at 25.2 percent. But the rate of decrease is slower.
 
Many experts have however expressed reservations about the sharp decrease in the population growth rate in West Bengal during 2001-2011. According to the 2011 census the growth rate was 17.84 percent in 2001 but nosedived to 13.84 percent in 2011.
 
Any attempt to give citizenship to Bangladeshi illegal immigrants may seriously jeopardize the political, social and economic life of the country as well as its security scenario too. West Bengal or the north eastern Indian states can no longer accommodate the Bangladeshis. So neither Mamata Banerjee nor any other political party should tinker with such an explosive situation.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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