The National Real Estate Development Council (NAREDCO) has asked the Centre to render housing projects that are in the stages of construction within the ambit of 12% GST reducing the present 18% in addition to 50% reduction in land from the prevalent 33%.
The benefit of this, as per the body, will position the tax rate at the plane of approximately 6% of the price of the property.
The association has presented its pre-budget memorandum, defining a variety of endorsements and propositions and asked for just deliberation by the government.
One more long awaited demand from the builder community is the industry positioning of the real estate sector. “Industry status is something which is long overdue to the sector. Government should help developers in getting better access to funds and also incentivize homebuyers to create demand for the sector, which is facing a lot of challenges”, said Rajeev Talwar, chairman, NAREDCO.
For ease-of-doing trade and to bring in investment, NAREDCO’s suggestions include an online, simplified and central project sanctioning procedure.
Parveen Jain, vice chairman, NAREDCO says, “Regulatory requirements are at times very harsh for the sector and affect the pace of growth. We want government to make them realistic and in sync with genuine business expectations.”
As maintained by NAREDCO, housing in totality from 30-150 sq meter carpet space, under PMAY, must be covered by the scope of section 80 IBA of Income Tax Act 2016, which will facilitate 100% deduction of profit obtained from such deals.
NAREDCO also stated that this can pull in private developers to undertake extensive low-cost housing construction.
NAREDCO also suggested the following:
- To offer incentives to home buyers, NAREDCO has proposed raising the bar on the cap of interest provided on home loan, by house buyers, from Rs 2 lakh to Rs 3 lakh.
- In addition to this, it also recommended that Capital Gain Tax if invested in construction of homes (single or multiple) should be absolved from Capital Gain Tax.
- To bring rental housing construction under the incentive scheme within India, the association seeks a fixed tax rate of 10% or escalating the deduction limitation from 30% to 50%.
- NAREDCO has also recommended getting rid of notional income with reference to the standard rate for calculating tax on profit or gain u/s 43CA of IT Act 1961.