Union Budget 2021: Realtors’ body NAREDCO seeks rationalisation of taxes

Realty developers have recommended enhancing loan to value (LTV) ratio up to 90% across the board for home loans for affordable houses of Rs 30 lakh or less and the same facility be extended to middle income and high-income group housing.

MUMBAI: Realty developers’ body National Real Estate Development Council (NAREDCO) is seeking rationalisation of taxes among key Union Budget measures to support and sustain the demand for housing.

In its pre-Budget recommendations to the Finance Ministry, it has also suggested focus on affordable rental housing, additional last-mile stress funds, liquidity measures, steps to boost the Special Economic Zones and resuming subvention scheme.

“The upcoming Budget has a stupendous task to ensure the economy recuperates sharply from the rude shock of Covid pandemic globally. The timely intervention by the government and apex regulatory bodies in form of fiscal impetus and policy reforms under the objective of ‘Aatmanirbhar Bharat’ have led to emergence of green shoots in the Indian economy and real estate sector,” said Niranjan Hiranandani, National President, NAREDCO.


According to him, the expectation from Union Budget 2021-22 is for the inventive measures which help to build and sustain the momentum propelling India towards a $5 trillion economy.

Realty developers have recommended enhancing loan to value (LTV) ratio up to 90% across the board for home loans for affordable houses of Rs 30 lakh or less and the same facility be extended to middle income and high-income group housing.

“The RBI, through a notification in 2017, allowed a loan to-value ratio (LTV) of up to 90% for home loans for affordable houses of Rs 30 lakh or less. Same facility should be permitted for other housing including MIG and HIG as well,” said Rajeev Talwar, Chairman, NAREDCO.
ADVERTISEMENT

The association has also suggested allowing interest on home loans for income tax deductions without any ceiling. At present, interest deductions under section 24 of IT Act 1961 on housing loans of Rs 2 lakh need to be removed in order to incentivise home buyers. NAREDCO has recommended bringing long term capital gains at 10% at 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.

Parveen Jain, Vice-Chairman, NAREDCO opines that the ban on subvention schemes should be reconsidered as these schemes gave a huge benefit to end-users. “RBI and the National Housing Bank (NHB) should reconsider the ban imposed on subvention schemes. The ban is not in favour of home buyers as a large proportion of them do not have the capacity to pay both EMIs on their home loans as well as house rents.

From industry’s perspective, one-time restructuring of loans, additional liquidity measures, introducing more of SWAMIH like stressed funds for the real estate sector will help meet the target of last mile funding for stressed projects, he added.

NAREDCO has also suggested permitting external commercial borrowings (ECB) for the realty sector and reforms for Special Economic Zones (SEZ), including extending notification date for IT/ITeS SEZs and withdrawal of minimum alternate tax (MAT).
ADVERTISEMENT

Regarding finance, risk weightage of loans to developers needs to be commensurate with other industries, and banks should fund all the components of the real estate projects including land, premiums, approval costs and the construction costs etc, the developers’ body said.
READ MORE
ADVERTISEMENT

READ MORE:

LOGIN & CLAIM

50 TIMESPOINTS

More from our Partners

Loading next story
Text Size:AAA
Success
This article has been saved

*

+