The Indian real estate sector has been witnessingvarious policy changes in the last year. ModiBuilders Group, a Hyderabad-based realty firm, believes that theseregulations will reconstruct the market for the investors. The Indian government is on a journey to bring apositive change in the sector.
Real Estate Regulatory Act (RERA) – to guaranteetimely deliveries, Goods and Services Tax (GST) – a unified tax regime and Demonetization– a step against the black money, are government’s regulations to promotetransparency and professionalism in the Indian real estate sector. The reforms have also benefitted the rental markets,along with the residential sector. Considered the most crucial unit of theIndian real estate, rental market can potentially grow in the upcoming years. Reasons for slow growth of rental housingModi Builders Group have been effectivein every venture and are the leading constructors of Hyderabad. The firm is currentlyoffering comfortable apartments for salein Hyderabad. Expertsfrom the firm believe that the rental market of Indian real estate has nottaken off, in spite its potential. They stated, “The developers don’t find itprofitable to build projects solely for rental purpose.
Moreover, the rentalreturns they can expect are less than the cost of construction. This is theprimary reason for the slow growth of rental housing.”However, new regimes by the Indian government areexpected to revive the rental market in India. The Hyderabad-based realtorsexamine these reforms of the year 2017.
· Section 194-IB to withhold taxesThe new section added to the Income Tax Act,Section 194-IB, makes it mandatory for tenants who pay more than Rs 50,000 towithhold the taxes at 5% on rent. The new amendment also demand individuals todeposit the amount within prescribed time. This new regime will bring landlordsreceiving higher income in spotlight. To claim the benefits of Tax Deducted atSource (TDS), they are accountable to report their full rental income in thetax returns. The finance analyst from Modi Builders said, “Both tenants andlandlords want their transactions clean. In fact, the tenants are now morecareful about the rental agreements and rental receipts. I think that, with newregimes, the misconducts will considerably get reduced.” · Eradication of fake rent receipts Section 10(13A) of the Income Tax Act saysthat employees can be exempted from the taxes under House Rent Allowance (HRA).
Earlier, to avail this benefit, employees simply needed to submit rent receiptsalong with the landlord’s PAN details if the rent amount exceeded Rs 1 lakh perannum.However, the government has recentlyintroduced a tribunal, wherein the officer evaluating can demand a proof forauthenticity. The leading constructors said that this new governing willeffectively deal with the practice of submitting fake rent receipts by theemployees.
Modi Builders consider the rental reforms beneficial for both the buyersand property owners. They will enhance the developer’s confidence, resulting inthe allocation of available units. Besides, with increasing transparency, the tenantswill have trust while making decisions.