As the Union Budget approaches, real estate developers and experts are calling for the sector to be granted industry status, along with a simplified single-window clearance system and a revision of GST input tax credit rules.
Builders have also called for an increase in the tax rebate on housing loan interest to at least Rs.5 lakh. Developer organizations like NAREDCO are additionally requesting that the second tranche of the Special Window for Affordable and Mid-Income Housing (SWAMIH) fund be launched in the upcoming Union Budget for FY 2024-2025, with a corpus of Rs.50,000 crore.
Union Finance Minister Nirmala Sitharaman will present the budget on July 23rd.
Mohit Jain, Managing Director of Krisumi Corporation, stated that the upcoming budget should offer greater benefits to the salaried class, which has been crucial in achieving record-high direct tax collections. One potential measure would be to raise the tax exemption limit for both the principal amount and interest paid on home loans.
He further said that amid a significant increase in property values over the past few years, the current Rs 2 lakh tax rebate on housing loan interest should be raised to at least Rs 5 lakh to stimulate demand for residential properties. Additionally, a separate section should be created for deductions on home loan principal repayments, as the existing Rs.1.5 lakh limit under Section 80(C) is insufficient.
Ramani Sastri, Chairman and MD of Sterling Developers Private Limited, emphasized the urgent need for increased tax incentives for both homebuyers and investors. He suggested that the government should raise the annual deduction limit for home loan interest payments from the current Rs 2 lakh to Rs 5 lakh to boost housing demand. He also recommended reducing GST on under-construction properties and making adjustments to raw material prices.
Ashish Puravankara, Managing Director of Puravankara Limited, stated that the real estate sector is urging the government to reinstate the input tax credit (ITC) under the GST regime. This move would support efforts to stabilize home prices and contribute to the sector’s economic growth.
Pyush Lohia, Director of Lohia Worldspace, stated that the real estate industry is seeking greater investment in infrastructure and substantial tax reforms. He emphasized that reducing GST on housing would have a substantial impact, as it would make homes more accessible and stimulate demand. These actions are not only essential for our sector, but also for overall economic development, employment generation, and the support of small businesses.
Angad Bedi, MD of BCD Group, reiterated comparable anticipations, emphasizing the crucial need to prioritize granting industry status to the sector in order to fulfill the government's goal of 'housing for all' and reaching a $5 trillion economy by 2025.
Hari G Babu, President of NAREDCO, urged the Finance Ministry to include the second tranche of the SWAMIH fund with a Rs 50,000 crore corpus in the upcoming Union Budget for FY 2024-2025. He also called for other budgetary support and relaxations, such as reinstating input tax credit under GST and providing incentives for rental housing, to achieve the "housing for all" target.
Samantak Das, Chief Economist and Head of Research and REIS in India at JLL, also mentioned that the enhanced allocation for the SWAMIH Fund will facilitate the completion of more brownfield affordable housing projects. Moreover, the industry anticipates tax incentives for corporate green bonds and exemptions to promote the construction of net-zero buildings.
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