Union Finance Minister Nirmala Sitharaman, is expected to present the Interim Budget 2024-25 on February 1, 2024. Considering that these announcements have implications for the real estate sector, which will in turn have a direct and indirect impact on not just stakeholders but the economy of the nation as a whole, associations have shared their recommendations for this year.
Pritam Chivukula, Vice President, CREDAI-MCHI, stated that a key aspiration for the coming year is the Finance Minister's response to the industry's request to increase the tax slab to Rs. 5 lakh per annum for interest rate deduction under section 24(b) of the Act, up from the current Rs 2 lakh. With property prices in metro cities skyrocketing, the industry advocates for a revision of the cap in the credit link subsidy scheme. Raising the limit from Rs. 45 lakh to Rs. 1 crore for metro city home buyers will significantly benefit the affordable housing segment, making homes more accessible. The industry also urges the government to introduce tax benefits for first-time homebuyers and reconsider the implementation of GST with an input tax credit on under-construction properties. Such measures are expected to lower property rates and stimulate demand, he pointed out.
Noting that the SWAMIH fund has played a critical role and unlocked liquidity leading to renewed interest among investors, both foreign and domestic in the Indian real estate sector, the National Real Estate Development Council (NAREDCO) has requested the government to create a second tranche of the SWAMIH fund with a corpus value of Rs 50,000 crore. As the ultimate beneficiaries of the fund are the home buyers who have been able to take delivery of their long-stuck dream homes, extension of the lending scheme would be a win-win scenario for both the industry and buyers.
The industry body reiterated its long-standing request for allowing the option of claiming input tax credit (ITC) by residential project developers with higher GST. In its letter to the FM, NAREDCO said that after the introduction of RERA, accounting has improved with regard to ascertaining the project cost. It said that ITC would also help in enhancing compliance as it would encourage developers to reduce unorganised sector purchase from unregistered persons.
Elucidating the tax burden due to the concept of notional income from housing property held as stock in trade after two years, G Hari Babu, President, NAREDCO suggested the amendment of Section 23(5) to either abolish 'notional income' or increase the timeline by five years for considering the notional income.
In its letter, NAREDCO, has also suggested several other taxation related amendments including removal of the Rs 2 lakh limit of interest deduction under Section 24 of IT Act 1961 on housing loans in order to boost housing demand. In a bid to help real estate projects get better liquidity, and relaxations the industry body has also recommended MSME status to projects with the required parameters and also allowing priority sector lending for real estate projects.