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

    Synopsis

    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.

    Agencies
    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.
    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.

    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).

    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.
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    4 Comments on this Story

    Ashu Bajaj51 days ago
    why doesn't the FM do something about people earning from rental income. There is no expense allowed while calculating the rental income. Just 30�duction. This 30% hasn't been revised since God knows when. It should be revised to 50 %
    Praker 51 days ago
    Government should stop all tax soaps on home loan.. bring law to link property with Aadhar... all property transactions should be via banks.. abolish circle rates and guidance value.. bring property tax, stamp duty under GST.. bring law to e auction all the vacant plots, houses and apartment..
    Prakash Ramiah51 days ago
    Naredco,credai,cii,ficci,asspchem,32 housing ministers,rera,rbi,secy urban,welfare,exp sec,rev sec,fin sec of state,central govts, hin pm,hon fm please look at the un spl rap report on adeq housing and take housing as right not as commodity for the sake of 35 cr houseless households,first flat serkers,slum,33 plus old etc.creation of fsi is technical issue.we have only 2.18 percent land share,80 lac circle rates,fsi from half,1,2,3etc and 5999 tier 1,2,3 cities and 6 lac villages.if you read sustainable development goal item 11 for housing you will appreciate that all should own a basic shelter. Rent payment to another household or entity is not real asset creation. Aff housing is by distribution of basic shelter needs thru fsi distribution.pl read maharashtra govt,t n govt concept papers on aff hsg.revently launched dharani portal of telengana govt.stamp dury,dev charges cut have minimum impact. Real issue is taming land cost.landed gets fsi,what does a land less get. Pl distribute basic fsi per household 1200 sq fsi as vouchers.meaning 42000 cr sq fsi as vouchers of 30 lacs for 2500 rs per sq ft is 1050 lac cr or 15 trillion real asset and housing for all at all times in all places.pl read the line project 7unveiled neom by ksa.where urban planning is destined.i am seeing dharavi and coovum from 1960 let my great grand children need not see dharavi,coovum slums. Pl let us distribute voucher thru rbi,rera. Other tax concession will take place. Let us build strong india,com
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