Real estate bodies Credai and Naredco have urged the finance ministry to enhance the deduction limit for interest on home loans to Rs 5 lakh from Rs 2 lakh and expand the definition of affordable housing beyond the price cap of Rs 45 lakh in metro cities.
“Credai expects the upcoming budget to give much needed impetus to infrastructural development, and housing by introducing various amendments, relaxations and extensions which will be helpful for realising Prime Minister’s dream of Housing for All and faster economic recovery,” said Harsh Vardhan Patodia, national president, Confederation of Real Estate Developers' Associations of India.
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The private developers’ body has asked the finance ministry to increase the interest deduction for homebuyers for tax rebate under section 24(B) to boost sentiment as the sector took a knock following the coronavirus outbreak.
The timeliness to avail CLSS benefits for middle income group (MIG) housing should be extended till the time allocated fund is not utilised, it said.
Credai also called for revisiting the definition of affordable housing and sought the eligibility of the projects to be extended from March 31, 2020 to March 31, 2023.
“We are also expecting some measures including deduction of loss under house property, amendment to Section 80C to increase limit for repayment of housing loan principal, reduction in income tax burden on rental housing and long-term capital gains on capital assets, relaxations in provisions for REITs for faster recovery in commercial real-estate,” Patodia said.
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Niranjan Hiranandani, vice chairman, Naredco, and managing director, Hiranandani Group, said the sector was hopeful that the long-standing demand for infrastructure status would be granted for inexpensive credit financing.
The definition of affordable housing should also be expanded to include houses priced beyond Rs 45 lakh in metro cities. Section 80 IBA should be amended to extend affordable housing benefits to all the projects registered with RERA between June 1, 2015 and March 31, 2023, Naredco said.
It also urged that the quantum of Special Window for Completion of Construction of Affordable and Mid-Income Housing Projects (SWAMIH) stress fund be enhanced and the subvention scheme reintroduced.
The External Commercial Borrowing in real estate sector should be permitted to address liquidity and funding issues.
To boost demand and supply, amendments in income tax will go a long way to boost the real estate sector. The income tax deduction on home loans should be enhanced up to Rs 5 lakh and the long term capital gain should be taxed at 10 percent, Hiranandani said.
Rental housing should also receive a filip in the upcoming budget, Naredco said.
“Developers are hoping for increased standard deduction in rental housing up to 50 percent, incentives for serviced apartments, exemption of tax on notional rental income, individual tax to be slashed at 25 percent, notification of Sec 80 IBA (6) (da) wherein time limit for developers of rental housing projects shall be increased to at least five years,” Hiranandani said.
Doing away with dual taxation to rationalise the difference between ready reckoner rate and market value would witness closures of more long pending transactions, he said.“To achieve the target of a $5-trillion economy, thrust on the labour intensive real estate sector, which has a multiplier effect on GDP growth inclusive of employment generation is imperative," he added.