Budget 2023: Real Estate Sector Seeks Higher Tax Exemption On Home Loan Interest From Govt
Experts from the real estate sector also believe that capital gains tax rate should be decreased from the current 20 per cent
The real estate sector exhibited a strong growth in 2022 after the decline in the pandemic and is now hopeful of continuing the upward trajectory. With the 2023 Budget round the corner, what is it that the key stakeholders of the sector expect from the government.
Across the nation, real estate developers are primarily expecting support in terms of higher tax exemption on the home loan interest under Section 24 up to Rs 5 lakhs from an existing Rs 2 Lakhs per annum. Such measures need to be incorporated to accelerate housing demands especially in the affordable housing segment. Experts from this sector also believe that capital gains tax rate should be decreased from the current 20 per cent.
The Rs 2 crore ceiling on capital gains for reinvesting in two properties needs to be also relooked at as such measures with bring about the much needed easing of capital gains. Such endeavors will not only encourage more consumers to buy homes but also create higher affordability.
Furthermore the existing rule under Section 54 which permits the claims for long term capital gains from sales of an existing property only if the construction of the new property is finished within three years of the sale should be done away with as it is unreasonable in current market conditions. In today’s day and age residential projects are extensive and all-encompassing wherein the home owners want world class amenities and environment compliances too.
All of this may often cause completion in three years rather difficult causing hurdles to homebuyers in setting off capital gains in the under construction stage. The extended timelines for buildings that are under construction to balance capital gain would be a very welcome step for boosting this industry.
One of the key components of the real estate industry is the affordable housing segment which has been the worst hit during the Covid 19 pandemic. This faction of our industry needs a boost from the government with incentives that solicit interest of developers. The supply of affordable housing was significantly affected during the pandemic as the buyer class was rendered jobless and underwent salary cuts. It is now the right time to bring this buyer class out of their hiatus and escalating the supply and launching corroborating schemes for the same.
In the current scenario affordable homes typically fall in the under Rs 50 lakh class; however this classification needs to be redefined basis the market regionally since affordable housing definition can vary from a metro to a tier II city. This range of homebuyers is very widespread and needs to be treated accordingly. Perhaps increasing the Rs 50 lakh to Rs 1 crore will both provide an impetus and generate interest of new players in this segment.
The real estate sector continues to be a key contributor to the growth of this country, pegged to fund 13 per cent of India’s GDP by 2025. This sector also happens to be the second-highest employment generator is real estate, after the agricultural sector. The government recognizes this sector as an important partner in the country’s growth and development and has supported it across decades.
However, the post-Covid 19 times demand a different treatment and innovative thought process. The new Budget can bring about many desired and vital changes to the real estate industry, benefiting consumers and developers alike and ultimately contributing to India’s growth story.
Mrinaal Mittal is the director of BlackTeak Realty.
[Disclaimer: The opinions, beliefs, and views expressed by the various authors and forum participants on this website are personal and do not reflect the opinions, beliefs, and views of ABP News Network Pvt Ltd.]
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