by neeraj bansal the real estate sector has been the backbone of the indian economy and has been a major contributor in the economic growth the approach followed by real estate players have been instrumental in changing the face of the country from being underdeveloped to accelerating its way to a developed country the sector contributes about 63 percent to the nations gdp 201213 is a major source of revenue for central state and local governments and provides employment to more than 50 million people alongwith construction sector it also supports about 300 ancillary industries such as cement steel building material paint and transport since the opening up of the indian economy to foreign investors in 2005 the sector has attracted more than us22 billion through foreign direct investment it is expected to attract us180 billion by 2020 however over the past few years it has been facing several problems such as increased land prices the most precious and scare raw material funding constraints slump in sales numerous approvals and a significant time required to obtain them and uncertainties on the tax and regulatory fronts however theres no denying that the sector has substantial growth potential which is evident from a burgeoning middle class significant high urbanization shortage of affordable housing proposed development of new cities and industrial corridors signs of revival in the global economy and the corresponding positive impact on the indian economy the need of the hour is for the government to reform its policies for the sector and tax regulations to provide the muchdesired fillip to the sector here are some changes that can be brought in the budget to initiate the process 1 service tax credit on construction activity is not available against output service tax liability on renting immovable property credit of input service tax paid on construction service should be allowed to avoid cascading effect of taxes 2 clarification on transferring of development rights the transferring of development rights entails transferring of rights related to land some states levy stamp duty on such transactions taxing the transferring of development rights has not been clarified under the current service tax regime suitable clarification should be issued to ensure that the transferring of development rights would not attract service tax 3 industry status for affordable housing the reserve bank of india characterizes the sector as risky which deters it from accessing funds considering that it generates significant employment opportunities and contributes to the gdp the sector should be given an industry status which will help it access bank funding at better interest rates and reduced collateral values a reduction in the base rate and repo rate would enable banks to grant loans to developers and home buyers at reduced rates which would increase affordability 4 revoke the larr act 2013 make only landowners consent mandatory mandates obtaining consent from 70 per cent of project affected families paf in case of public private partnership ppp projects and 80 per cent in case of public