Budget 2024: Real estate sector demands industry status, tax rebate on housing loan interest

Budget 2024: Real estate sector demands industry status, tax rebate on housing loan interest from the budget

With the Union budget approaching, real estate developers and expert demand industry status for the sector along with simplified single-window clearance system, revision in the GST input tax credit rules.

The builders have also demanded that tax rebate on housing loan interest should be enhanced to a minimum of Rs 5 lakh. Developer bodies like NAREDCO have also demanded that the second tranche of the Special Window for Affordable and Mid-Income Housing (SWAMIH) fund should also be launched with Rs 50,000 corpus in the upcoming union budget for FY 2024-2025.

Union finance minister Nirmala Sitharaman will present the budget on July 23.

Here are key expectations of the real estate sectors from the budget:

Mohit Jain, Managing Director, Krisumi Corporation, said that the upcoming budget should provide greater benefits to the salaried class as they have played a pivotal role in record-high direct tax collections and one such step would be to increase the tax exemption limit on both the principal amount and interest paid on home loans.

“Amid substantial rise in property value over the last couple of years, the current Rs 2 lakh tax rebate on housing loan interest should be enhanced to a minimum of Rs 5 lakh. Such a step will boost demand for residential properties. Similarly, a separate section should be introduced for the deduction against home loan principal repayment as the present Rs 1.5 lakh limit under section 80(C) is inadequate,” he said.

Ramani Sastri - Chairman & MD, Sterling Developers Private Limited said that there is an express need for more tax sops for both homebuyers as well as investors. “The government should raise the deduction limit for interest payment on home loans from the existing Rs 2 lakh a year to Rs 5 lakh, which will add momentum to housing demand, and also reduce GST on under-construction properties and effect adjustments in raw material pricing,” Sastri said.

Ashish Puravankara, Managing Director, Puravankara Limited said that the real estate sector urges the government to reinstate the input tax credit (ITC) under the GST regime. This initiative will help support the efforts to stabilise home prices while contributing to the sector's economic growth.

Pyush Lohia, Director, Lohia Worldspace remarked that real estate sector is looking for increased investment in infrastructure and meaningful tax reforms. “Easing GST on housing would be a significant step, making homes more affordable and driving demand. These measures are crucial not just for our sector but for broader economic growth, job creation, and supporting small businesses,” he said.

Pradeep Aggarwal, Founder and Chairman, Signature Global (India) Limited, said that the real estate sector anticipates several key reforms in the budget to drive growth and efficiency.

“Granting Industry status to real estate sector will attract investments and streamline regulations. A simplified single-window clearance system will expedite project approvals, reduce delays, and enhance overall project execution. Revising the GST input tax credit rules will reduce property prices and increase transparency,” he said.

Angad Bedi, MD, BCD Group also echoed similar expectations and said that the long-standing demand for according the industry status to the sector needs to be looked at on priority in order to achieve the government’s ambition of ‘housing for all’ and becoming a $5 trillion economy by 2025.

Additionally, the government should look at strengthening the regulations around the sector including RERA, single window clearances for all approvals and swifter resolution of stuck projects to accelerate the sector’s growth, he said.

Hari G Babu, president, National Real Estate Development Council (NAREDCO) said that the finance ministry should come up with the second tranche of SWAMIH fund with Rs 50,000 corpus in the upcoming union budget for FY 2024-2025, along with other budgetary support and relaxations including allowing input tax credit under GST and incentives for rental housing in order to achieve the housing for all target.

“The ultimate beneficiaries of SWAMIH fund are homebuyers as the second instalment will revive more stalled projects, the purpose SMAHIH was created,” he said.

Similarly, Samantak Das, Chief Economist and Head – Research and REIS, India at JLL said that the increased Allocation for the SWAMIH Fund will help more brownfield affordable housing projects reach completion. Additionally, the sector expects tax benefits provision for corporate green bonds and exemptions to encourage the development of net-zero buildings.