The National Real Estate Development Council (NAREDCO) has recommended the government take up tax rationalisation measures in the upcoming Union Budget to boost the pandemic-hit real estate sector of the country.
On Thursday, the industry body urged the govenrment to enhance the loan to value (LTV) ratio up to 90 per cent across the board for home loans.
"Allowing interest on home loans for income tax deductions without any ceiling, current interest deduction under section 24 of IT Act 1961 on housing loans of Rs 2 lakhs should be removed in order to incentivise home buyers," it said in a statement.
It noted that two segments, rental and affordable housing need impetus in this budget. For rental housing, the government should enhance HRA tax exemption, and increase depreciation rate for the rental projects like in commercial buildings and allow 'carry on' of loss from rental income.
"Similarly, affordable housing will benefit from increasing completion period to six years, while enabling concessional lending rate for Affordable Housing Projects. Extending the Credit Linked Subsidy Scheme (CLSS) for all segments will support home buyers," NAREDCO said among other suggestions.
It has also urged th govenrment to allow more stress funds for the sector along with other measure to improve the liquidity.
NAREDCO National President Niranjan Hiranandani said: "The on-going Covid-19 pandemic has impacted global economies and Indian real estate is not spared from the depths of despair. The fiscal impetus announced under Aatmanirbhar Bharat has led to renewed consumer demand that led to the emergence of green shoots in Indian economy and real estate sectors."
The laudable measures like tax rationalisation, additional stress fund, ample liquidity tools will keep the momentum going and propel India towards a $5 trillion economy, he said.
NAREDCO Chairman Rajeev Talwar said: "Interest on housing loans should be fully allowed 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."