The country's largest lender, State Bank of India (SBI) on Wednesday said that taxation structure is not very favourable to the real estate sector in India.
In an interview to CNBC-TV18’s Latha Venkatesh, Rajnish Kumar, chairman, said, "Everybody believes that there is a lot of money which a builder makes in the real estate. That is not the reality at least in today’s environment. So, if the sector is to be helped, it may be in the domain of state government but affordability has to increase."
"If affordability has to increase, then amongst the cost structure, the highest cost component is the land and then various forms of taxes including stamp duty, Goods and Services Tax (GST) etc. Based on my discussion with builders, the construction cost is not very high, it is the cost of the land and the duties or the charges which makes it a very costly affair. So affordability is definitely an issue. If there is some relief possible, then it would be welcome," Kumar said.
Speaking from the sidelines of India Mortgage Leadership Conclave 2019, he said, “In real estate sector, many foreign funds have invested. There are different segments and in these segments, the appetite is different. We are talking about the incomplete projects. There are three categories of projects. One is the project is complete, occupancy certificate (OC) is there and the sale of the inventory is slow."
"Second is where project is 70-80 percent is complete and there is some shortage of funds and non-banking financial companies (NBFCs) were major lenders to these projects. Third is you have many projects in the National Capital Region (NCR), which are all stuck in the legal quagmire and there are no easy solutions to that,” he added.
“These type of problems don’t go away in 365 days. If things were so simple in a country like ours, I would be more than happy. However, the first and second category, I am more hopeful that things will happen and can happen. The third category – no guess,” Kumar said.