NEW DELHI: Realtors’ body NAREDCO on Tuesday suggested that the tax exemption on interest on self-occupied property loans should be increased to Rs 5 lakh in the upcoming budget from Rs 2 lakh currently to boost housing demand amid a rise in housing prices and mortgage rates. Builders also sought some tax incentives to boost demand and supply of affordable homes.
NAREDCO noted that under Section 24 of the Income Tax Act, the deduction allowed on interest on loans for self-occupied property is limited to Rs 2 lakh.
“Given the rising property prices and interest rates, NAREDCO proposes increasing this limit to at least Rs 5 lakh,” the association said in a statement.
The realtors’ body mentioned that currently the annual value of property held as stock-in-trade and not let out is considered nil for up to two years from the end of the financial year in which the construction completion certificate is obtained. After this period, the notional income is taxed.
It suggested that this provision should not apply to real estate developers holding stock due to weak market conditions and recommended increasing the time limit from two to five years.
G Hari Babu, President of NAREDCO, said these recommendations, if implemented, will not only provide much-needed relief to developers but also stimulate demand in the housing sector.
Ramani Sastri – Chairman & MD, Sterling Developers, said, “This year, the demands go beyond the usual expectation of single-window clearance and industry status, which could unlock financial advantages and streamline project approvals. There is an express need for more tax sops for both homebuyers as well as investors”.
The government should raise the deduction limit for interest payment on home loans from the existing Rs 2 lakh a year to Rs 5 lakh, which will add momentum to housing demand, he added.
“The budget should offer a degree of personal tax relief, either by ways of lower tax rates or by readjusting tax slabs, which is the need of the hour,” Sastri said.
In his wishlist, Dhruv Agarwala, Group CEO, Housing.com and PropTiger.com, said the demand and supply for affordable homes have shown fluctuating trends over the last three years across major tier I and tier II cities.
“In response, the upcoming budget should focus on revitalising both demand and supply for homes in the Rs 15-75 lakh per unit price bracket. Introducing interest subsidy programmes could incentivise potential homebuyers effectively,” he said.
To boost supply, Agarwala said the government could strategically deploy its extensive land banks in partnership with private developers, offering land and capital at concessional rates.
“Implementing tax incentives for developers engaging in these affordable projects could further stimulate activity in this sector. It’s noteworthy that substantial demand persists within the Rs 15-75 lakh price category, necessitating focused governmental action in the upcoming budget,” he observed.
Agarwala said this approach would not only catalyse growth in the real estate sector but also stimulate approximately 200 ancillary industries, substantially boosting job creation across these sectors.
“Moreover, longstanding sector demands, such as granting industry or infrastructure status and raising tax exemption limits on home loan repayments, should be considered to sustain long-term growth in the housing sector,” he added.
Source Homevior.in
