The industry hopes the government’s second relief package includes a lower GST for the sector and no penalty on delayed TDS and GST payments at least for a year
The real estate sector hopes the government would allow restructuring of non-NPA loans for up to two years, charge lower GST and no penalty for delayed TDA and GST payments for a year, as part of its second relief package for sectors aversely hit by the coronavirus-led lockdown.
“All loans classification should be put to a halt as on December 31, 2019,” a realtor told Moneycontrol.
Minister of Housing and Urban Affairs Hardeep Singh Puri had told realtors during a webinar organised by CREDAI and Naredco recently that the ministry will put across to the Finance Ministry, the sector's long-pending demand for restructuring of loans for a period of 12 months.
The real estate sector has also demanded that a lower GST be charged from the sector and that GST should be payable upon collection instead of accruals. It has also said no penalty, interest on delayed payment of taxes such as TDS and GST should be charged.
“There should be no coercive action by the competent authority for delayed payment of TDS and GST for a minimum of 12 months,” another realtor said.
Reports have said that the government is already contemplating lower GST for the real estate sector.
Lending institutions must also provide a 10 percent top-up loan at MCLR, within existing security and rate of interest on all existing loans to be brought down to MCLR for 12 months at least, the realty sector has demanded.
Marginal Cost of Funds based Lending Rate (MCLR) is the minimum lending rate below which a bank is not permitted to lend. RBI can give authorization for the same in exceptional cases.
Realtors also want that the validity of all approvals and permissions granted by competent authorities must be extended by a year suo moto. So far, several RERA authorities have decided to extend the validity period for registration of real estate projects, where the date of completion gets over on or after March 15, for a period of three months on account of COVID-19.
They have also asked all bank guarantees to be released to ensure that there is immediate liquidity in the hands of the businesses. To receive a bank guarantee from a bank, developers have to deposit margin money which ranges from 25 percent to 100 percent.
A real estate builders' body has also demanded that the government allow part sharing of cashflows between the Rs 25,000 crore stress fund and the existing lenders.
"Since the last four months, only two projects have received funding from AIF amounting to no more than Rs 540 crore, a negligible fraction of the interest liability accumulating during the period. We recognize that the entire concept of AIF is premised upon the fund having priority in repayment over the existing lenders," Credai said in a letter addressed to the Secretary, Department of Financial Services, Ministry of Finance.
The government had in November last year created a special window of Rs 25,000 crore for completion of over 1,500 stalled housing projects. However, realtors have said existing lenders are not giving the NoCs (no-objection certificates) for creation of the first charge to SBI CAP, which is managing the fund.
The Finance Ministry is working on a second relief package for the Indian economy hit hard by the coronavirus outbreak and the 21-day nationwide lockdown imposed to curb the contagion. Last month, the government announced a Rs 1.70 lakh crore relief package in the form of foodgrain and cash transfers for the poor and vulnerable section of the society to help them deal with the hardships caused by the lockdown.
The announcement is expected to be made towards the end of lockdown so that the industry can be put back on the track and the economy reinvigorated as soon as possible.First Anniversary Offer: Subscribe to Moneycontrol PRO’s annual plan for ₹1/- per day for the first year and claim exclusive benefits worth ₹20,000. Coupon code: PRO365
