The price limit should be increased from Rs 45 lakh to Rs 80 lakh.Doing so will increase demand.
Credai suggestion to the central government
Credai has suggested that the definition of affordable housing in the country should be changed, and the current limit of Rs 45 lakh should be increased to Rs 75-80 lakh. Additionally, it recommended offering income tax benefits on interest paid for home loans. According to Credai, this would boost the demand for affordable and mid-range housing.
Speaking on the 25th founding anniversary, Credai President Boman Irani addressed the media, saying that a 1% GST should be implemented on housing projects priced between Rs 75-80 lakh to increase demand. Currently, only homes priced below Rs 45 lakh attract a 1% GST, while homes above that price are subject to a 5% GST. Developers also cannot avail input tax credits, he explained.
Irani pointed out that in 2017, homes priced under Rs 45 lakh were designated as affordable housing, and considering annual inflation, this price limit should be revised to Rs 75-80 lakh. He also emphasised that there should be no price limit for affordable housing. Instead, he suggested maintaining a carpet area limit of 60 square meters in metro cities and 90 square meters in non-metro cities for affordable housing.
Irani also recommended reducing taxes to ensure that consumers have more funds available. Presently, there is an income tax exemption on interest payments of up to Rs 2 lakh per financial year under Section 24. Credai’s newly elected president, Shekhar Patel, suggested replacing this with a 100% tax exemption on the paid interest amount, which Irani believes would significantly increase demand.
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