Naredco presents its wish-list for Budget

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The National Real Estate Development Council (Naredco) has come up with a ‘wish-list’ for the Union Budget 2021 which includes measures to combat the economic crisis leading to upward growth trend. The following are the measures recommended by the real estate body:

Rationalisation of tax: Enhancing loan-to-value ratio up to 90 per cent across the board for home loans for affordable houses of Rs- 30 lakh or less and the same facility should be extended to MIG and HIG. Allowing interest on home loans for income tax deductions without any ceiling, current interest deduction under section 24 of IT Act 1961 on housing loans of Rs. 2 lakhs should be removed in order to incentivise homebuyers. Bring long term capital gains at 10 per cent (on par with provision of section 112 for equity shares; and reducing the period of holding house property to up to 12 months from existing 24/36 months to qualify as a Long-term Capital asset is need of an hour.

Affordable rental housing: Two segments, rental and affordable housing need impetus in this Budget. For rental housing, enhancement in HRA Tax Exemption; an increased depreciation rate for the rental projects like in commercial buildings and allowing ‘carry on’ of loss from rental income will make a difference. Similarly, affordable housing will benefit from increasing completion period to six years; while enabling concessional lending rate for affordable housing projects. Extending the Credit Linked Subsidy Scheme (CLSS) for all segments will support homebuyers.

SWAMIH Stress Fund: The laudable initiative of establishing the SWAMIH Fund for Rs 25000 crore to help real estate sector is appreciated. However, allowing more such stress funds will help facilitate the last-mile funding for stressed and stalled projects. The industry demands estimated Rs 1,25,000 cr via many HFCs / NBFCs who are ready to establish such funds for ailing real estate sector.

Liquidity measures:  One-time restructuring of loans will play an important role – the requirement of the unit being ‘standard unit’ if done away and restructuring permitted for all units as per mutual agreement with the financing enterprise and the borrower would have a positive impact.

SEZ: Allowing external commercial borrowings for the real estate sector and reforms for Special Economic Zones, including extending notification date for IT/ITeS SEZs and withdrawal of MAT will go a long way in ensuring green shoots in real estate.

Subvention scheme: Lifting the ban on subvention schemes needs to be reconsidered for the direct benefit to the homebuyers.

Niranjan Hiranandani, National President, Naredco, said, “The on-going COVID-19 pandemic has impacted global economies and Indian real estate is not spared from the depths of despair. The fiscal impetus announced under Atmanirbhar Bharat has led to renewed consumer demand that led to the emergence of green shoots in Indian economy and real estate sectors. The laudable measures like tax rationalisation, additional stress fund, ample liquidity tools will keep the momentum going and propel India towards a $5-trillion economy. Towards this goal, Naredco seeks to work hand-in- glove with the Government to achieve this ambitious goal.”

Rajeev Talwar, Chairman, Naredco, said, “Interest on housing loans should be fully allowed under Income Tax Deduction without any ceiling. The current limit of interest deduction under Section 24 of IT Act 1961 on housing loan of Rs 2 lakh should be removed to incentivise homebuyers and spurring overall demand. Also, loss from house property should be fully allowed to be adjusted against other heads of income. In case of unadjusted loss, it should be fully allowed to be carried forward to subsequent years.”