As the housing market revives from the lows hit last year, developers expect more measures in the upcoming budget to boost demand in the real estate sector.
A major demand of the developers has been to remove the ban on subvention scheme for home loans.
The National Real Estate Development Council (NAREDCO) in its recommendations to the Finance Minister Nirmala Sitharaman noted that the ban is not in favour of home buyers as a large proportion of them do not have the capacity to pay both EMIs on their home loans as well as house rents.
Industry bodies have also demanded a further widening of the definition of affordable housing.
Confederation of Real Estate Developers’ Associations of India (CREDAI) has suggested that unit with carpet area as defined under RERA may be redefined as ‘that does not exceed 90 square metre in the metros and 120 square metre elsewhere’.
Currently, residential units in metro cities with 60 square metres of carpet area and in non-metro cities residential units with 90 square metres of carpet area are considered as affordable housing.
Tax reforms sought by the developers include the demand for allowing interest on housing loans to be considered under Income Tax Deduction without any ceiling.
The current limit of interest deduction under Section 24 of IT Act 1961 on housing loan of Rs 2 lakh should be removed to incentivise home buyers and spurring overall demand, NAREDCO has recommended.
“Also, loss from house property should be fully allowed to be adjusted against other heads of income. In case of unadjusted loss, it should be fully allowed to be carried forward to subsequent years,” it said.
It has also recommended that Long term Capital Gains from sale of housing property should be taxed at 10 per cent as the provision similar to section 112 for equity shares. Also, period of holding of house property should be reduced to 12 months from existing 24/36 months to qualify the same as Long term Capital asset.
CREDAI is of the view that REITs are one way of solving the liquidity problem in real estate and it also offers the investors a choice to diversify their portfolio.
It has suggested an extension of exemption under Section 80C to investments in REITs starting with Rs 50,000.
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