With Heavy Losses in the Offing, Realty Sector Urges for Tax Wavers & Payment Deferment For A Year

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The global coronavirus disease (Covid-19) pandemic that has entailed a nationwide lockdown since March 25 to control its spread has brought sales to a halt in the realty sector, stopped all business activity and suspended constructions for the last 46 days. The unprecedented crisis has prompted developers to seek a slew of relief measures from the Uttar Pradesh government and the Centre, without which, major developers Monday said, the survival of the sector itself would become a challenge.

“Without a relief package from both the Uttar Pradesh government and the Centre, we do not believe that the business will survive in the post-Covid-19 days. The revival of this already crisis-ridden sector is a distant dream in view of recent liquidity crisis if the government will not announce quick financial help. As of now, we are focusing on survival and need immediate help from the government,” Prashant Tiwari, president, western UP wing of Confederation of Real Estate Developers Association of India (Credai), a builders’ lobbying group.

Credai is set to demand the postponement of land cost dues, waiver on taxes, waiver on stamp fee and other benefits in an interaction via video conferencing on Tuesday with the Uttar Pradesh cabinet minister for industrie Satish Mahana and principal secretary (infrastructure and industrial) Alok Tandon.

The developers’ demands also include mortgaging unsold stock (ready flats), the reduction of interest on project loans, waiver of interest on land cost dues if civic amenities are delayed, a waiver on time-extension charges, financial dues delinked from occupancy certificate issuance, the postponement of financial dues on housing projects, a waiver in stamp duty for one year, the reduction of prevailing impractical circle rates (property cost at which flats or plots are sold) to boost sales, and a waiver on electricity charges for builders during the lockdown period, among others.

Around 50% of total the 3.5 crore daily wage labourers, who were earlier employed in realty projects in different cities across the state, have lost their livelihoods and more may stand to lose jobs in the absence of a relief package, said a survey conducted by the National Real Estate Development Council (NAREDCO), another builders’ group.

The same survey said this crisis will not only affect livelihood of seven crore (in the country) daily wagers and skilled or semi-skilled professionals, but also negatively impact homebuyers who have invested around ₹32.24 lakh crore in the real estate sector across the country.

In Noida, Greater Noida and Yamuna Expressway region alone have an investment of around ₹50,000 crore, according to an estimate done by NAREDCO.

“If the Uttar Pradesh government will not quickly address the crisis, then things will get out of hand. The UP government must declare one year after Covid-19 as a “zero period”. During the zero period, the UP government must postpone collection of housing land cost. Besides that, the government should not charge lease rent, stamp fee and other taxes for the period so that the sector can get a chance to stand on its feet. The ministry of finance should restructure business loans, reduce interest rates, reduce goods and services tax, simplify fresh loans, ensure handholding by banks and make way for last-mile funding from banks at low interest rates if they want this sector to survive. Realty has already lost ₹2 lakh crore in the past 45 days of closure,” said RK Arora, president, NAREDCO, Uttar Pradesh.

In Noida, 20 builders have sought permission to resume constructions and Greater Noida has given permission to restart work on 91 realty projects. In Noida, Greater Noida and Yamuna Expressway region, around 600 ongoing housing projects owe the government around ₹40,000 crore in land dues. And they are repeatedly failing to repay land cost dues owing to a the dip in sales over the last two to three years. On repeated defaults, these three authorities are imposing compound interest that can go up to 20%. And now the Covid-19 crisis has further aggravated the financial distress, developers said.

“Our sales offices are shut, nobody can come out of their homes or purchase inventory, and construction sites are already closed. Labourers are leaving for their home towns. Covid-19 has made things worse for most builders who were already battling a financial crisis. And as the business is hit, all other dependent businesses such as supply of labour, construction material, and small scale industries are suffering. The UP government should give us a year’s time to finish construction and deliver projects. Along with the time extension, the government should also defer payment of all kinds,” said Amit Modi, vice-president, Credai.

Industries minister Satish Mahana said the government will extend the zero period sought by developers. “The UP government will certainly give a zero period as the real estate sector was affected due to Covid-19 pandemic as all activities including construction remained shut. The government is seriously considering all demands made by builders because we do not want homebuyers, who have invested their hard-earned money to suffer. And the livelihood of labourers and professionals who are employed with developers and the survival of other dependent businesses are interlinked with real estate sector. Therefore, the government will address all issues being faced by them (developers).”

(Source: Hindustan Times)

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