The Centre should enhance the tax deduction limit against home loan interest from Rs 2 lakh to Rs 5 lakh in the upcoming Budget 2023-24, real estate industry experts told Business Standard. They also suggested that some incentives to promote the public-private partnership (PPP) model in affordable housing should also be brought in.
“After a lull of about 7-8 years, real estate sector is witnessing good demand and sales since the last two years,” said Pradeep Aggarwal, founder and chairman of real estate development company Signature Global.
“Keeping in view the rising interest rate on home loans, the government should consider enhancing the tax deduction limit against home loan interest to Rs 5 lakh,” he added.
Subhankar Mitra, managing director of Advisory Services at real estate service agency Colliers India said that the Centre must introduce incentives to promote the participation of institutional players in the affordable housing segment.
“The government also needs to promote affordable rental housing schemes in PPP mode. PPP models should be incentivized to cater to mass housing and housing for the underprivileged section,” he added.
Experts said the industry drives 200 other industries, including manufacturing and services. The incentives for the sector will thus have a multiplier effect on other industries.
Saransh Trehan, managing director of another realty company Trehan Group agreed that the “tax deduction limit associated with home loans” should be enhanced.
Sterling Developers, apart from the tax deduction, also want the reduction in capital tax gains from the second house.
“There is a specific need for income tax relief on a second home and positive measures with regard to long-term capital gains, which will benefit home buyers in a big way and also stimulate the real estate sector. We feel that the capital gains tax rate should be reduced from 20 per cent and the Rs 2 crore cap on capital gains for reinvesting in two properties should also be removed,” Ramani Shastri, chairman and MD of the company, told Business Standard.
Luxury home developers optimistic about growth
The luxury house segment, for sales and rental, has seen good growth in the last two years of the pandemic. According to a recent report by Anarock, the average monthly rentals in posh residential colonies across seven major cities rose 8-18 per cent in the last two years. On the other hand, their capital value appreciated by 2-9 per cent.
Lincoln Bennet Rodrigues, chairman and founder of luxury home developers in Goa, The Bennet and Barnard Company, said that the luxury residential market in India is witnessing “unprecedented growth” with new ultra-rich people on a buying spree. The budget must thus focus on tax sops to keep the sentiment high.
He added that the Centre “should also strengthen the existing financing systems to provide liquidity as developers need a rational capital flow to keep up the work process”.
Moreover, to cushion the customers from rising home loan EMIs, Amit Goyal, CEO of consultancy firm, India Sotheby’s International Realty, said, “I do believe raising the tax breaks on interest and principal amount on home loans from 2 to 5 lakhs will be the most welcome move for the industry and home buyers alike”.
Cut the paperwork for co-working space companies
Apart from the widespread tax deduction enhancement demand, co-working space developers want the Centre to reduce the rate of tax deducted at source (TDS) on their services and reduce the paperwork.
“Presently, the rate of TDS applicable on co-working services is high as co-working companies provide renting of both movables and immovables. As the industry is competitive, reducing the rate of TDS on co-working services will be a positive initiative,” Manas Mehrotra, founder of co-working firm 315Work Avenue said.
“Another important concern is the need to cut through paperwork. In overall terms, the ease of doing business will play an important role in the growth rate of the co-working industry in India in the coming future,” he added.
The Budget Session for 2023 will start on January 31, and Nirmala Sitharaman, finance minister, will announce the Union Budget on February 1.
For all the latest Business News Click Here
For the latest news and updates, follow us on Google News.
Denial of responsibility! NewsBit.us is an automatic aggregator around the global media. All the content are available free on Internet. We have just arranged it in one platform for educational purpose only. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials on our website, please contact us by email – [email protected]. The content will be deleted within 24 hours.
