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Realty sector needs perks for affordable housing
Realty sector needs perks for affordable housing
Colliers anticipates some benefits to home buyers in this Budget to boost demand in mid and affordable housing segment
Hyderabad: In the Union Budget 2023-24, the industry experts anticipate a hike in interest deduction to encourage the homebuyers to invest in the real estate and increase the demand in the market. The rising interest rates are slowing the demand in the affordable and mid segments, says Colliers, a diversified professional services and investment management company.
It is expecting the 100 per cent tax holiday for affordable housing projects under Section 80IBA to be continued which was earlier only extended till 31 March 2022. This can provide a boost to rental housing in the affordable segment. Complete exemption for rental income up to Rs 3 lakh for houses costing up to Rs 50 lakh can directly incentivize owners to rent out their houses to the targeted segment.
The Budget should focus on stirring demand for affordable housing, and incentivising sustainability in the real estate sector. The limit in the tax deduction on interest paid should be increased from the current Rs 2 lakh to about Rs 3-4 lakh in case of self-occupied property and to be allowed without any limit in case of let out property.
On the commercial front, it will be a huge breather if investments in REITs can get exemption under section 80C, starting Rs 50,000. Moreover, sovereign green bonds can be given a further push which could attract investments and enhance green development", said Ramesh Nair, CEO - India & MD Market Development - Asia, Colliers.
There should be a separate deduction for the repayment of the principal amount of the home loan, which is currently clubbed under section 80C. At present, the ceiling of deduction for principal repayment of housing loan is Rs 1.5 lakh along with other tax saving instruments. Alternatively, the overall ceiling limits of section 80C can be raised up to Rs 5 lakh, which can further spur investments.
Raw material costs have been constantly on the rise since last three years when they touched highest levels in March 22 led by supply chain constraints. Average cost of construction rose 10-12 per cent YoY.
The government should take steps to reduce the GST on such materials especially cement which corresponds to 28 per cent of the total cost, Nair said.
Input Tax Credit (ITC) can also be levied on raw materials to boost commercial and residential development, he added.
