The upcoming Union Budget 2024 has instilled hopes among the Indian real estate stakeholders for the resolution of longstanding demands in the sector and to cater to the growing need for housing across cities.
The Confederation of Real Estate Developers' Associations of India (CREDAI) has proposed several points for the upcoming budget to unlock the full potential of the Indian real estate sector.
"Through our recommendations, we have addressed some of the fundamental issues that we believe will provide a huge boost to both demand and supply through a mix of increased tax exemptions and tweaks in the definition of affordable housing, which is bound to provide a definitive way forward as Indian real estate is projected to contribute close to 20 percent of India’s economy once it reaches the $10 trillion milestone,” said Boman Irani, President, CREDAI.
Long-term capital gains
CREDAI said long-term capital gains on capital assets should be taxed at 10 percent and the holding period should be reduced to 12 months. Capital gains on the sale of residential property should be exempted if 50 percent of the sale realisation is invested in more than one residential property. Currently, long-term capital gains on capital assets are taxed at a rate of 20 percent and the holding period for eligibility is 24 months.
Increasing tax exemptions
Currently, the ceiling of the deduction for the principal repayment of a housing loan is Rs 1.5 lakh.
"Many are not able to claim the benefit of this deduction to the fullest considering the above limit and other available deductions under Section 80C. Deduction under Section 80C for principal repayment of housing loans should be increased from the existing limit of Rs 1.5 lakh," CREDAI added.
Interest against rental income
CREDAI recommends the definition of affordable housing be revised as a unit with a 90-square-metre (sqm) RERA carpet area in metros and a 120-sqm RERA carpet area in non-metros without a cap on the cost of the unit.
The present limit for deduction of interest against rental income under Section 24(b) of the IT Act is Rs 2 lakh for self-occupied property.
"Homebuyers lose the benefit of an interest claim that exceeds Rs 2 lakh, despite actual payment of the interest. The limit for deduction of interest should be increased to Rs 5 lakh in respect of self-occupied property," CREDAI said.
It added that there should also be a provision for a credit guarantee scheme for housing loans of up to Rs 40 lakh and house improvement loans of up to Rs 20 lakh.
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