Budget 2022: CREDAI seeks tax sops to boost housing demand; hike in deduction limit on home loan interest

New Delhi: Realtors apex body CREDAI has sought various tax sops to boost housing demand, including increase in the deduction limit for interest on home loans to Rs 5 lakh from the current Rs 2 lakh.

In its Budget recommendations to the Finance Ministry, CREDAI which has around 13,000 developer members, has also sought infrastructure status for the sector and change in definition of affordable housing.

CREDAI's National President Harshvardhan Patodia expects the upcoming budget to give much-needed impetus to infrastructure development and housing by introducing various amendments, relaxations and extensions.

"We urge the Finance Ministry to increase the interest deduction for homebuyers for tax rebate under section 24(B) to boost the overall home buying sentiment especially in these difficult times with the onset of the third wave," Patodia said.

CREDAI also demanded amendment to Section 80C under the Income Tax Act to increase limit for repayment of housing loan principal, reduction in income tax burden on rental housing and long-term capital gains on capital assets.

On interest deduction on home loans, CREDAI said that "in case of individuals, the interest in respect of first self-occupied property should be allowed without any limit."

Alternatively, the limit for deduction of interest should be increased to Rs 5 lakh in respect of the self-occupied property, it added.

CREDAI said the limit of Rs 45 lakh on the value of property to qualify as affordable housing renders housing in metros ineligible for the benefits under Section 80 IBA, which promotes the development of such low cost homes.

The limit on value of the unit be raised to Rs 75 lakh (for non-metro cities) and Rs 1.50 crore (for metro cities), it said.

As builders are entering into joint development agreements (JDA) with landowners to develop new projects, CREDAI pointed out that the payment of tax at the time of JDA whereas the actual consideration would flow in at future date, acts as a disincentive towards housing and real estate development.

"The amendment will help avoid enormous amount of litigation," the association said.

Deepak Goradia, President at CREDAI-MCHI, said: "We are hopeful that the upcoming budget will bring realty under the infrastructure status which in turn will unlock multiple tax benefits for boosting the foreign and local investment and the overall demand in the sector."

He said the government should consider increasing the tax rebate for homebuyers significantly.

To promote rental housing, CREDAI suggested that 100 per cent of the rental income up to Rs 20 lakh per annum should be exempt from the payment of income tax, with institutions paying MAT as applicable.

Established in 1999, CREDAI is the apex body for private real estate developers in India, representing over 13,000 developers through 21 states and 217 city chapters across the country.