Shishir Baijal, CMD, Knight Frank India
Real Estate

Shishir Baijal, CMD, Knight Frank India

On housing demand, Section 80 C tax deduction on home loan principal repayment does not provide for a focused benefit on housing. A separate annual deduction of Rs 150,000 will provide the much-needed fillip to opt for house purchase. The Credit Linked Subsidy Scheme (CLSS) has ensured a remarkable increase in the activity level in the affordable housing sector. Given the Covid-19 pandemic disturbances and a likely two-year time frame for the economy to recover from the impact, the deadline for the CLSS scheme should be extended by two years, up to 31 March 2023.

Additionally, given the relatively higher house prices in major cities, the upfront amount of the CLSS subsidy should be increased to Rs 0.35 million from the current level of Rs 0.23-0.267 million depending on the income category, with corresponding enhancement in income criteria, making the subsidy amount more significant in comparison to the house value.

The stressed asset fund to revive stuck residential projects has been progressing well. Considering there is a well-developed mechanism to prevent misuse and to ensure timely completion of projects with proper supervision in this fund, the government should consider increasing the size of the fund.

With the increased financial support, the stressed asset fund can also be encouraged to lend to a wider bouquet of projects till the non-banking financial (NBFC) sector gets back on its feet.

To avoid cascading impact of taxes and consequently house prices, the government should use this budget session to refer recommendation on restoration of GST input tax credit to the upcoming GST council meet.

For REIT, the government should reduce the timelines of investment from three years to one year for long-term capital gains taxation; thereby ensuring larger retail investor participation and easing a long-term funding challenge for such projects.

On housing demand, Section 80 C tax deduction on home loan principal repayment does not provide for a focused benefit on housing. A separate annual deduction of Rs 150,000 will provide the much-needed fillip to opt for house purchase. The Credit Linked Subsidy Scheme (CLSS) has ensured a remarkable increase in the activity level in the affordable housing sector. Given the Covid-19 pandemic disturbances and a likely two-year time frame for the economy to recover from the impact, the deadline for the CLSS scheme should be extended by two years, up to 31 March 2023. Additionally, given the relatively higher house prices in major cities, the upfront amount of the CLSS subsidy should be increased to Rs 0.35 million from the current level of Rs 0.23-0.267 million depending on the income category, with corresponding enhancement in income criteria, making the subsidy amount more significant in comparison to the house value. The stressed asset fund to revive stuck residential projects has been progressing well. Considering there is a well-developed mechanism to prevent misuse and to ensure timely completion of projects with proper supervision in this fund, the government should consider increasing the size of the fund. With the increased financial support, the stressed asset fund can also be encouraged to lend to a wider bouquet of projects till the non-banking financial (NBFC) sector gets back on its feet. To avoid cascading impact of taxes and consequently house prices, the government should use this budget session to refer recommendation on restoration of GST input tax credit to the upcoming GST council meet. For REIT, the government should reduce the timelines of investment from three years to one year for long-term capital gains taxation; thereby ensuring larger retail investor participation and easing a long-term funding challenge for such projects.

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