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- Gummi Ramreddy National Vice President- CREDAI
- Encourage construction sector in the upcoming Union Budget
As the economy is recovering from the Corona, proposals have been sent to the Central government to boost demand for homes across the country, said Gummi Ramreddy, CREDAI national vice-president. Ahead of the Union Budget for 2022-23 by the Center, they have sent a comprehensive report on a number of issues. He spoke exclusively with the ‘Real Estate Guru’ on these issues and sought an increase in the tax rebate limit for employees. Here is more about the proposals from himself.
Affordable prices
CREDAI National has proposed that flats with 60 square meters of carpet area in metro cities and 90 square meters area in non-metro cities, should be included in the list of affordable housing units. The stamp duty value of the house also should not exceed Rs 45 lakh. It has pointed out that there was confusion about the term ‘affordable housing’ due to various schemes being implemented by the Central as well as various States under affordable housing. CREDAI recommended revision of the norms in this context.
Section 80-IBA
Only projects completed within five years from the date of first approval are eligible for 100 per cent tax exemption under Section 80-IBA. Even if the developers got approvals before June 1, 2016 and now converted it to affordable housing, the tax exemption is not made applicable. In this context, CREDAI requested that the clause in Section 80-IBA be amended. The amendment proposes to make this rule applicable to projects for which got the plans approved, but construction has not yet begun. It has suggested that tax exemption can be given only after scrutiny by RERA.
Section 24 (B) Interest waiver on home loan
Currently, the interest deduction for homebuyers for tax rebate under section 24(B) is Rs 2 lakh. The Center was requested to boost the overall home buying sentiment by increasing the limit to Rs 5 lakh of self-occupied property.
To encourage rental houses
Individuals and companies are currently taxed on income generated from renting out residential homes after purchase. CREDAI has proposed a 100 per cent tax exemption on rental income of up to Rs 20 lakh per annum.
Relaxations in the Real Estate Investment Trusts (REITs) Rules
There are currently no regulations under 80C. In view of this, CREDAI sought the Center to give exemption under Section 80C for investments starting from Rs 50,000 under REITs rules. It currently takes 36 months for a REITs to be considered a long-term capital asset under Section 2 (42A) and CREDAI demanded that it should be reduced to 12 months.
Payment of principal in Housing Loans
As per the present provision, the ceiling of deduction for principal repayment of housing loan is Rs 1.5 lakh and the deduction is clubbed with other tax savings. Hence, CREDAI suggested that the deduction under section 80C for principal repayment of housing loan should be increased from the existing limit of Rs 1.5 lakh or consider it for a separate or standalone exemption. CREDAI proposed that individuals should be exempted for repayment upto Rs 50 lakh over a period of five years, irrespective of the value of the house.
