Ahead of its presentation in February 2024, the National Real Estate Development Council (NAREDCO) has requested Finance Minister Nirmala Sitharaman to launch the second tranche of the SWAMIH (Special Window for Affordable and Mid-Income Housing) Investment Fund with a corpus of Rs 50,000 crore in the upcoming budget for 2024-25 and also urged her to remove income tax on unsold flats in any project.
The apex body of real estate developers in India has also sought MSME or micro, small and medium enterprise status for real estate projects that fall within the eligibility parameters prescribed for other sectors.
In a letter to Sitharaman, NAREDCO president G Hari Babu said that the ultimate beneficiaries of SWAMIH are homebuyers as the second instalment will revive more stalled projects, the purpose SMAHIH was created.
“SWAMIH has done a great job in reviving stuck projects and about Rs 1 lakh crore worth of non-performing assets became performing assets and over 2 lakh homebuyers benefited due to this scheme. So the government should create a second tranche of the SWAMIH fund with a corpus value of Rs 50,000 crore for the financial year 2024-25,” Babu told Moneycontrol.
In a bid to help real estate projects get better liquidity and relaxations the builders’ body has also recommended MSME status to eligible real estate projects and also allowing priority sector lending for realty projects.
“The government can put some cap while allowing MSME status to the sector. We demand that MSME status should be given to those realty projects where the annual turnover is Rs 50 crore or Rs 100 crore. The threshold or parameters can be decided by the government. This would allow developers to avail low-interest loans,” Babu said.
Babu also said that they have requested the government to do away with income tax levied on builders on unsold property. He said that as per Section 23(5) of the Income-tax Act, in case of unsold property held as stock-in-trade which is not let out, the annual value of the property after two years from the financial year in which the completion certificate was received will be assessable as income from the property based on its notional rent.
"Due to three Covid-19 waves and subsequent lockdowns and consequential impact on the economy, many tenants who were occupying offices and shops have either closed down or negotiated rentals and have paid zero or minimum rentals. At present, there are over 7 lakh unsold units across the country. We recommended that the income tax on unsold units should be exempted,” Babu said.
In its pre-budget recommendations, NAREDCO also demanded relaxations such as allowing input tax credit (ITC) under the goods and services tax (GST) and incentives for rental housing to achieve the target of housing for all. The developers’ body has also requested that developers be allowed to claim ITC for residential projects falling in higher-slab GST.
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