Real estate developers have pitched for increased benefits to boost affordable housing. They want infrastructure status for affordable housing and suggest that the rate of goods and services tax (GST) should not be more than 5%.
A delegation of the Confederation of Real Estate Developers Associations of India (Credai) held a pre-budget meeting with finance ministry officials on Tuesday and submitted a wish list that included increased benefits for affordable housing, increased income tax rebate for homebuyers and suggested that the rate of GST should not be more than 5%.
“We have asked for infrastructure status for affordable housing. We have also pitched for a higher interest subvention for affordable housing, which was 1% on housing loans of up to Rs 35 lakh. This should be enhanced to 2% for housing loans of Rs 50 lakh at least. We have also asked for income tax rebate to be increased from Rs 2.5 lakh to Rs 4 lakh,” said Getamber Anand, president, Credai.
Homebuyers in India are entitled to claim interest and principal components of home loan repayments for tax benefits. Currently interest payable on a self-occupied house is subject to a maximum deduction of Rs 2.5 lakh under the head Income from House Property.
To enable more supply in the affordable housing segment, “we have also pitched that the size of houses be increased from 30 to 60 sq m to 60 to 90 sq m as aspirationally people want bigger houses so that they can live comfortably, Anand said.
Union Budget 2016 had announced a zero service tax policy for developers constructing flats of less than 30 sq m in tier-I cities and less than 60 sq m in tier-II cities, with the intention of incentivising developers to create affordable housing.
The GST tax rate should not be over 5%, otherwise the home buyer will be doubly hit as they will have to pay both the stamp duty and the GST, he said.
While the goods and services tax (GST) tax structure has been announced, the real estate industry is waiting with bated breath to see which tax rate is applied to the real estate and construction industry. The finance minister has clarified that the highest tax slab will be applicable to ‘sin’ items and other categories that are currently taxed at around 30%.
Ministry sources confirmed that the delegation was given a patient hearing. “We have not made any commitment but will look into their request,” they said.