Real estate developers seek tax relief for home buyers in upcoming budget
1 min read . Updated: 28 Jan 2023, 04:19 PM IST
PremiumTo encourage housing for all, the government should consider increasing the limit of the tax deduction on interest for a housing loan from ₹2 lakh per annum to at least ₹5 lakh per annum, according Kamal Khetan, CMD, Sunteck Realty
New Delhi: Real estate developers have sought tax relief for home buyers and increase in deduction cap for home loans in the Union Budget for FY24, to be presented by finance minister Nirmala Sitharamanon 1February.
The real estate sector has witnessed a robust recovery post Covid and demand is seen growing, according to market experts.
Kamal Khetan, chairman & managing director, Sunteck Realty, said, “The Indian real estate market has displayed resilience, and the upcoming union budget 2023-24 offers an opportunity to continue that stability and growth. The government should extend further support by providing tax relief to homebuyers and consider reforming personal taxes such as reduced rates or modified tax brackets to foster more housing demand."
He said that to boost consumer buying sentiment, the deduction cap on principal amount of a home loan, currently set at ₹1.5 lakh per annum, should be increased to ₹4 lakh per annum.
“Additionally, to encourage housing for all, the government should consider increasing the limit of the tax deduction on interest for a housing loan from ₹2 lakh per annum to at least ₹5 lakh per annum. Furthermore for price stability and to mitigate the risk of rising raw material cost, input tax credit on GST should be reinstated," Khetan said.
In a recent letter to the finance ministry, the National Real Estate Development Council (NAREDCO) had sought the launch of SWAMIH-2 with a wider scope to continue to support the industry.
It has sought provisioning of at least ₹25,000 crore for the SWAMIH-2 fund in upcoming fiscal FY 2023-24. Rajan Bandelkar, President, NAREDCO said, “The SWAMIH Fund was one of the most innovative and effective tools which helped solve the problem of last mile funding of stalled housing projects to a great extent, bringing relief to several distressed home buyers. Extending the duration and expanding the scope of this fund would do wonders. Allocation of at least ₹25,000 crore for next fiscal alone shall boost the economy, create more jobs and attract huge investments."
Amit Jain, chairman and managing director, ARKADE Group said that for developers focused on redevelopment projects, the double GST payment has been a major deterrent as it has led to a cost escalation at a time when margins are already under pressure. “The real estate industry has seen disruption during the Covid-19 pandemic in the last two years with increasing costs, falling revenues and other problems such as labour shortage. Hence, the finance minister should reverse the decision on GST payment of 5% in order to give a fillip to redevelopment projects."
Besides, enhanced tax concessions on income from renting of housing properties and removal of taxation on notional rental income can further boost demand for new properties, Jain said.
The real estate developers also recommended that the homebuyers must get relaxation from the long-term capital gains from the sale of house property.
“Long-term capital gains from the sale of house property are presently taxed at 20% through a special provision like Section 112 for equity shares. In addition, the period of holding of house property is currently 24 months to qualify as a Long-term Capital Asset (Section 54 of IT Act 1961). It is recommended that the tax rate be reduced from 20% and the holding period for a property be reduced from 24 months to 12 months so that there is no capital gains tax liability for the same. In addition, the cap of INR 2 crores on capital gains for reinvesting in two properties should also be removed," said Anshuman Magazine, chairman and CEO – India, South-East Asia, Middle East and Africa, CBRE.
The property developers also expects higher budgetary allocations and easier capital availability.
“While the industry will look for higher budgetary allocations, easier capital availability and greater relaxations, the middle-class population, which has not had many direct sops in the recent past, will eagerly look forward to direct benefits like tax-cuts or higher deductions. Increased funding for social welfare programs, measures to control prices of essential goods and services, and initiatives to create job opportunities, etc., will all be expected from the upcoming budget,“ Anurag Mathur, CEO, Savills India said.
