Representative image for real estate
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New Delhi: Real estate developers have pitched for cheaper land and regulatory and tax-related relief including raising the income tax deduction on home loan repayment to Rs 5 lakh from the existing Rs 2 lakh and lower stamp duty to boost the development of affordable housing.
In its pre-budget memorandum, the National Real Estate Development Council (NAREDCO), which works under the aegis of the Ministry of Housing and Urban Affairs, has called for expanding the scope of alternate tax regime and bring down the rate of dividend taxation on residents to 10 per cent in line with the non-resident Indians.
At present, manufacturing companies are charged a reduced rate of 15 per cent tax for development of infrastructure and housing projects near the facility. However, this benefit is not provided to LLP, partnership or proprietorship entities.
“We recommend that the benefit of such reduced rate of tax be extended to all infrastructure and large housing projects whether undertaken by company, firms, LLP or proprietorship concerns,” said NAREDCO Chairman Niranjan Hiranandani.
Hiranandani said despite the Pradhan Mantri Awaas Yojana and other initiatives a large gap remained in the housing sector.
He claimed that there was a need to develop at least three crore houses – one crore in urban areas and two crore in rural areas. “We need to do more for housing,” he added.
Parveen Jain, President, NAREDCO, said the income tax deduction limit of Rs 2 lakh on the home loan repayment should be raised to Rs 5 lakh or more for owner occupied houses.
Jain also called for reinstatement of the Income Tax Settlement Commission. The commission established in 1976 to provide taxpayers a one-time opportunity to enter into a compromise and settlement arrangement with the Income-tax Authority to grant them relief from penalties and prosecution, was discontinued effective from February 1, 2021.
“Rationalising taxation, especially on housing finance, will directly stimulate end-user demand, provide much-needed impetus to a sector grappling with a significant housing shortage, and offer relief to homebuyers impacted by project delays arising from cash flow constraints, while restoring overall buyer confidence,” Jain said.
The Confederation of Real Estate Developers’ Associations of India (CREDAI) has called for a credit guarantee scheme for housing in line with the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE).
“Targeted measures—such as redefining affordable housing parameters, enhancing interest deductions, introducing a Credit Guarantee Scheme, rationalising GST, and establishing a National Rental Housing Mission—will unlock investment, reinforce homebuyer confidence and improve financial inclusion,” said Shekhar Patel, President, CREDAI.
Real estate lobby has also pitched for reduced GST rates on residential units and works contracts, alongside streamlined input tax credit provisions.
“This rationalisation will lower effective costs for developers and buyers, improve project viability, encourage higher transaction volumes, and generate increased revenue through expanded sectoral activity,” CREDAI said in its pre-budget recommendation.