NEW DELHI: The National Real Estate Development Council (NAREDCO) has suggested the finance ministry to come up with the second tranche of the Special Window for Affordable and Mid-Income Housing (SWAMIH) fund with Rs 50,000 crore corpus in the upcoming union budget for FY 2024-2025, along other budgetary support and relaxations including allowing input tax credit under GST and incentives for rental housing in order to achieve the housing for all target.
In its letter to the finance minister, Nirmala Sitharaman, NAREDCO reiterated its long-standing request for allowing the option of claiming input tax credit by residential project developers with higher GST.
NAREDCO said that after the introduction of RERA, accounting has improved with regard to ascertaining the project cost. It said that ITC would also help in enhancing compliance as it would encourage developers to reduce unorganized sector purchase from unregistered persons.
Elucidating the tax burden due to the concept of notional income from housing property held as stock in trade after two years, G Hari Babu, president, NAREDCO suggested the amendment of Section 23(5) to either abolish ‘notional income’ or increase the timeline by five years for considering the notional income.
Under Section 23(5) in case of unsold property, held as stock-in-trade, which is not let out, the annual value of the property after a period of two years post the financial year in which completion certificate was received, will be assessable as income from the property on the basis of its notional rent.
The industry body recommended that in order to incentivise rental housing in the country the tax burden on notional rental income should be exempted.
NAREDCO, has also suggested several other taxation related amendments including removal of the Rs 2 lakh limit of interest deduction under Section 24 of IT Act 1961 on housing loans in order to boost housing demand.
It has also recommended MSME status to projects with the required parameters and also allowing priority sector lending for real estate projects.
