Indian and foreign realty players, in a bid to cash in on the upturn in the economy, have made a strong pitch for rationalisation of floor space index in metros and Tier-II and -III cities. They want FSI to be in line with export benefits for the sale of residential properties to NRIs and foreigners.
They have also demanded the reinstatement of tax concessions under Section 80 I(B) to developers for expediting affordable housing projects. Daniel Ringelstein, director (urban design), Skidmore, Owings & Merrill suggested that India could explore an option of setting up a real estate investment trust like the US to provide funds for the realty sector and also give further tax sops.
Ringelstein said an REIT was a tax designation for a corporation investing in real estate that reduced or eliminated corporate income taxes. REITs were required to distribute 90 per cent of their income, which might be taxable, to investors. He informed that REIT had been framed for investment in real estate like mutual funds provided for investment in stocks.
“India can seriously consider this option at a time when the realty sector is looking up,” he noted.
He said that availability of various sops would be beneficial, when ‘we are living in remarkable times, especially in terms of the worldwide trend of population migrating from the countryside to cities. Our goal as designers of urban districts and cities is to influence urban growth so that it is intelligent and sustainable’.
Sunil Mantri, chairman, Sunil Mantri Group, has called on the Centre to provide tax sops under Section 80 I(B) to developers.
This was withdrawn in 2008. Besides, sale of houses to NRIs and foreigners, as well as procurement of material, should be provided export benefits, like the tourism and hotel sector.
“Export benefits are provided to the realty sector in the US, Europe, Dubai and Southeast Asia. Similar export benefits will help increase foreign direct investment into the realty sector to the tune of at least $5 billion annually.
Besides, the reinstatement of tax concessions under Section 80 I(B) would give a much-need boost to developers to undertake mass and affordable housing projects, Mantri said.
Sudhir Jambhekar, senior partner FXFowle Architects, New York, has called for freeing up FSI in metros and other cities in a selective manner.
“Restrictions on FSI, for example about 2.5 to 3 points in Mumbai , needs to be relaxed as there are limitations on horizontal growth. Mumbai and other cities, which are facing space constraints, are going to witness vertical growth. In Manhatten, FSI of 21 is allowed,” he said.