Budget 2020 Expectations: Real estate developers demand measures to uplift market sentiment
Budget 2020: Real Estate developers have said that deduction on principal repayment of housing loan up to Rs 5 lakh should be considered for exemption.
Budget 2020: Real estate developers have want Narendra Modi Government to announce measures that can lift the morale of the realty market. Industry insiders are of the opinion that despite several measures, such as corporate tax reduction, interest rate reductions, Rs 25,000 crore alternative investment fund (AIF), announced by the Government, the real estate market has remained sluggish for the entire real estate community. This is due to sluggish demand, non-availability of liquidity and low sentiment. With the upcoming Union Budget 2020-21 (#BUDGET2020ZEE), we expect the Government to continue to be the catalyst for the sector by providing long-term solutions to stimulate demand for housing.
Batting for measures in budget 2020 to uplift the market sentiment, Kamal Khetan, Chairman and Managing Director at Sunteck Realty Limited said, "The primary priority must be to uplift the buyer sentiment. While this can be done at multiple levels, increasing the current tax exemption limit on the interest of Rs 1.5 lakh (Rs 3.5 lakh for affordable housing) to Rs 5-6.5 lakh (at least for FY21 and FY22) will lead to a confidence boost for buyers to expedite their decision. The Government must simultaneously provide adequate tax relief to those stuck with incomplete projects, yet paying pre-EMIs regularly without any tax relief. Another area to boost buyer sentiment is via tax relief on house property income. Tax experts highlight that the standard deduction of 30 per cent has not been revised since early 2000. This must be evaluated, considering the current dull scenario and higher inflation in house maintenance costs."
See Zee Business Live TV streaming below:
Khetan went on to ad that even though the proposed plans to improve liquidity to developers and provide last mile funding are major steps towards alleviating the sector, real estate developers believe that banks must be prodded to ease lending to real estate projects, perhaps through relaxation of risk weightage norms, albeit temporarily.
Demanding tax sops to boost the real estate buyers' sentiment, JC Sharma, Vice Chairman and Managing Director, SOBHA Limited said, "To boost housing demand and the sector, we believe that the deduction on principal repayment of housing loan up to Rs 5 lakh per annum should be considered for exemption, in addition to the current Rs 1.50 lakh per annum under section 80C of the IT Act. In addition to this, if the set-off limit in case of loss from ‘house property’, both rented and self-occupied, against any other head of income, should be increased to Rs 5 lakh. This will provide a much-needed impetus to the home buyers. Further, it is suggested that 100% exemption on home loan interest instead of the current limit of Rs 2 lakh is should be considered. Similarly, the timeline for deduction should be extended. The current period for availing deduction is between 1st April 2016 and 31st March 2017, with a limit of Rs 50,000. Extension of the timeframe for availing the loan, increasing the limit of deduction along with the maximum value of loan and value of the residential house for tax incentives are much-needed steps to encourage the first-time home buyers."
Sharma of SOBHA Limited further added that resolution of the current liquidity issue should be prioritised. The 25,000 crore AIF (Alternate Investment Fund) should be disbursed at the earliest. More importantly, there is a need for a long-term solution, such as the restructuring of loans in the need of the hour.
Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.