Union Budget 2020 India: Indian real estate sector, contributing about 8 per cent of the country’s GDP, has its eyes fixed on the upcoming budget as it seeks measures (which will help boost GDP as well) for the sector’s revival. While some steps such as changes in Insolvency and Bankruptcy Code (IBC) and setting up of stressed funds were taken to spur investments, some direct measures will further ramp up the revival and will provide the government a chance to boost the real estate demand, the Confederation of Real Estate Developers Association of India (CREDAI) said.
With government gearing up to announce the budget on February 1 this year, CREDAI has recommended some measures that association believes will further encourage private sector investment in affordable housing and will contribute to the government’s objective of ‘Housing for all by 2022’. The association has recommended that the government should provide one-time restructuring scheme temporary relief on principal and interest of two years. According to CREDAI, this step is required on an immediate basis as the liquidity crunch continues to take a toll on sector.
The definition of affordable housing which states “Affordable housing comprises units with a carpet area as defined under RERA that do not exceed sixty square metres in the metros and 90 square meters elsewhere,” should be made applicable universally which included all government agencies also.
Moreover, for income tax returns, consumers could avail some deductions of interest on loan while acquiring a house. These deductions are only applicable in those loans which were sanctioned between April 2016 and March 2017. In order to boost demand for housing, CREDAI suggests to extend this timeline to March 31, 2022. Also, 100 per cent interest should be allowed as a deduction for a home loan in the case of individuals for first home. Individuals who are buying houses for rental purposes, they should also be allowed deductions on 100 per cent home loan for second and third houses.
Apart from these, CREDAI also recommends changes in real estate GST. “The benefit of ITC be restored to real estate GST by charging GST at 12 per cent with allowance for land cost at 33 per cent on par with current rate of works contract services for government projects,” CREDAI said.
The association also seeks ease in funding flow with housing loan of upto Rs 1 crore to be counted in priority sector and interest rate below 7 per cent.