Realtors seek uniform tax on rental income

Realtors seek uniform tax on rental income
The Financial Express, Jan 8, 2010, Page 3

fe Bureaus, New Delhi

Ahead of Budget 2010-11, real estate companies on Thursday urged the finance minister for lower and uniform taxation on rental income received by property owners to help the growth of realty sector in the country.

In their pre-Budget recommendations to the ministry, the real estate firms have suggested that income from property rentals should be taxed at a flat rate of 10%, depreciation allowance of 50% should be allowed on investment made by employers in employee housing which should be 100% in case housing is in the area of less than 500 sq ft.

NAREDCO, a Delhi-based real estate trade body suggested that existing debt of developers be restructured till March 2011 as the real estate companies are still reeling under the liquidity constraints and cash flow problems.

Developers also urged finace minister Pranab Mukherjee for allowing access to external commercial borrowing (ECBs) in all areas of real estate. Currently, only integrated townships are allowed to raise ECBs and the realty sector has been placed on negative list of the RBI for raising this mode of debt.

It was also suggested that Real Estate Mutual Fund (REMF) / Real Estate Investment Trust (REIT) should be encouraged, all governmental clearance for projects should be executed faster, conversion to limited liability partnership (LLP) should be easier and beneficial, and issues relating to double taxation under minimum alternative tax resolved.