New Delhi: the National Real Estate Development Council (NAREDCO) has strongly recommended increasing the tax exemption limit on interest paid for home loans from the current INR 2 lakh to INR 5 lakh. This proposal comes amidst rising housing prices and interest rates, aiming to bolster housing demand and provide relief to homebuyers and developers alike.
Under the current provisions of Section 24 of the Income Tax Act, individuals can claim a deduction of up to INR 2 lakh annually on interest paid towards loans for self-occupied properties. NAREDCO argues that the existing limit is insufficient in light of escalating property costs and borrowing rates, necessitating a substantial revision to INR 5 lakh. The realtors’ body emphasized that such a revision would not only alleviate financial burdens on homeowners but also incentivize prospective buyers amidst a challenging economic backdrop. They highlighted that higher tax exemptions would stimulate demand across the housing sector, particularly benefiting middle-income groups aspiring to own homes.
NAREDCO proposed extending tax reliefs to real estate developers by revising existing regulations concerning properties held as stock-in-trade. Currently, properties held under this category are deemed tax-exempt for two years after obtaining the construction completion certificate. NAREDCO suggested extending this period to five years, citing market volatility and sluggish demand conditions. Industry stakeholders echoed these sentiments, emphasizing the need for comprehensive tax reforms to rejuvenate the real estate sector. They stressed that beyond tax exemptions, streamlined project approvals and industry status designation are crucial for unlocking financial advantages and sustaining growth momentum.
Commenting on the fiscal measures needed, experts from Sterling Developers underscored the importance of broader tax relief strategies in the upcoming budget. They highlighted the potential impact of lower tax rates or adjusted tax slabs in enhancing affordability and encouraging investments in residential properties. Representatives from Housing.com and PropTiger.com advocated for targeted initiatives to promote affordable housing segments, particularly within the INR 15-75 lakh price range. They suggested introducing interest subsidy programmes and extending tax incentives to developers engaged in affordable housing projects to stimulate supply and meet growing demand.
