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Real estate lobbies for tax relaxation, SWAMHI Funds

The industry is pacing its way back in the country with many rejoining the workforce after stagnation due to lockdown

Haryana authority imposes Rs 2.25 cr fine on 3 realtors

Haryana authority imposes Rs 2.25 cr fine on 3 realtors

New Delhi: With Union Budget scheduled to take place in the next two weeks, real-estate sector in India is lobbying for additional support from the government through initiatives such as tax relaxation and establishment of SWAMIH Funds. The industry, which suffered period of stagnation due to Covid-19 and subsequent lockdown, is pacing its way back in the country with many rejoining the workforce.

In the wake of upcoming financial budget, India's apex real-estate body National Real Estate Development Council (Naredco) under the ministry of Housing and Urban Affairs, has submitted a letter to the Finance Minister Nirmala Sitharaman, expressing measures to combat the ongoing economic crisis in the country and suggestions for upward growth trend for the real-estate sector.

The wishlist includes reforms such as relaxation of taxes to avail home loans, affordable rental housing schemes, establishment of SWAMIH fund for Rs 25000 crore to rescue the stalled projects, liquidity measure, Special Economic Zones, and revoking the ban on Subversion Scheme.

Niranjan Hiranandani, President of Naredco, in a press conference said, "The economy is on the right path to recovery and the Prime Minister has focused on rebuilding the country. Initiatives such as Atmanirbhar Bharat, proves that India is ahead of other developing nations in a lot of things.

The fiscal impetus announced under Aatmanirbhar Bharat has 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 and ample liquidity tools will keep the momentum going and propel India towards a $5 trillion economy."

Hiranandani said that it is plausible for the nation to achieve 10 per cent additional growth in GDP by the year end of 2021, keeping in mind the target of creating $5 trillion economy. With Digital Bharat initiatives being a success, Naredco President hopes revolution in the education and housing sector through a greater push by the government.

On establishment of SWAMHI Funds, Naredco welcomed the special reserve of Rs 25,000 crore to help real estate sector. The letter suggests that allowing more such stress funds will help facilitate the last mile funding for stressed and stalled projects.

"Industry demands estimated Rs 1,25,000 crore via many HFCs / NBFCs who are ready to establish such funds for ailing real estate sector. This will allow for faster appraisals and sanctions," the Naredco letter adds.

"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 INR 2 lakh should be removed to incentivise home buyers 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," Rajeev Talwar, Chairman of Naredco said.

The letter has expressed confidence in housing schemes such as affordable rental housing through enhancement in HRA Tax Exemption and an increase in depreciation rate for the rental projects like in commercial buildings. In addition to this, Naredco explained, in the letter, that the deduction of 30 per cent from the annual rental income (for purpose of maintenance) should be increased to 50 per cent which would further improve ROI. "The RBI, through a notification in 2017, allowed a loan to-value ratio (LTV) of up to 90 per cent for home loans for affordable houses of Rs 30 lakh or less. Same facility should be permitted for other housing including MIG and HIG as well," Talwar added.

Archana Rao
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