CREDAI asks for several tax sops to increase housing demand

CREDAI has asked for different tax sops to stimulate housing demand, including an upsurge in the deduction limit for interest on house loans to Rs 5 lakh from the present Rs 2 lakh. In its Budget recommendations to the Finance Ministry, CREDAI, which has approximately 13,000 developer members, has additionally asked for infrastructure status for the sector and change in the meaning of affordable housing. CREDAI's National President Harshvardhan Patodia anticipates the forthcoming budget to give the much-needed impetus to infrastructure development and housing by bringing various modifications, relaxations and extensions. Patodia told the media that they request the Finance Ministry to increase the interest deduction for homebuyers for tax rebates under section 24(B) to facilitate the overall home buying sentiment, especially in these challenging times with the start of the third wave. CREDAI additionally requested an amendment to Section 80C under the Income Tax Act to raise the limit for repayment of housing loan principal, decrease the income tax burden on rental housing and long-term capital gains on capital assets. On interest decrease on house loans, CREDAI told the media that in the case of individuals, the interest in respect of first self-occupied property must be permitted without any limit. Alternatively, the limit for deduction of interest should surge to Rs 5 lakh in respect of the self-occupied property. CREDAI said that the limit of Rs 45 lakh on the value of property to authorise as affordable housing provides housing in metros ineligible for the advantages under Section 80 IBA, which encourages the development of such low-cost houses. The limit on the value of the unit is increased to Rs 75 lakh (for non-metro cities) and Rs 1.50 crore (for metro cities). Since builders are entering into joint development agreements (JDA) with landowners to build new projects, CREDAI pointed out that the payment of tax at the time of JDA, whereas the actual consideration would flow in a future date, serves as a disincentive towards housing and real estate expansion. The amendment will assist in avoiding a tremendous amount of litigation. Image Source