NAREDCO Pre Budget Recommendations

Share It

The ‘wish list’ for Union Budget 2021 presented by real estate body NAREDCO, includes measures to combat the economic crisis and result in upward growth trend -: - Rationalization of Tax - Enhancing loan to value (LTV) 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 home buyers. 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 & 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 home buyers. To promote Rental Housing, The deduction of 30% from the annual rental income (for purpose of maintenance) should be increased to 50%. This will not only improve ROI but will also encourage citizens from investing in residential properties for giving on rent. SWAMIH Stress Fund- The laudable initiative of establishing the SWAMIH fund for Rs 25000 cr 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. Industry demands estimated Rs 1,25,000 cr via many HFCs / NBFCs who are ready to establish such funds for ailing real estate sector. This will allow for faster appraisals and sanctions. 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 home buyers. Dr. Niranjan Hiranandani, National President, NAREDCO said, “The fiscal impetus announced under Aatmanirbhar 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 rationalization, additional stress fund, ample liquidity tools will keep the momentum going and propel India towards a $5 trillion economy. Revival is a bigger challenge as compared to maintaining organic growth levels. Through a positive Budget, real estate looks forward to continued government support; a helping hand to sail through the current difficult scenario.”