India’s powerful builders’ body says their demand for reduction of Goods & Services Tax (GST) on under construction projects has not received the support that they expected from the recently presented Union Budget.
To incentivise home buyers, National Real Estate Development Council (NAREDCO) has suggested an increase in cap of interest paid on home loan, by home buyers, from Rs 200,000 to Rs 300,000.
NAREDCO has urged the government to bring under construction housing projects in 12% GST slab from existing 18% along with 50% abatement for land from prevailing 33%.
This, according to the body, will bring tax rate at the level of around 6% of the property cost.
These suggestions were submitted to the government in its pre-budget memorandum, which also outlined various recommendations and suggestions.
For a long time NAREDCO has been demanding industry status to real estate sector. It would help developers get better access to funds and also incentivize homebuyers to create demand for the sector, which is facing a lot of challenges, said Rajeev Talwar, NAREDCO Chairman.
For ease-of-doing business and attract investment, NAREDCO has also suggested an online, streamlined and centralized project approval procedure.
Parveen Jain, Vice Chairman, NAREDCO said: “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.”
According to NAREDCO, the entire housing from 30-150 sq metre carpet area, under Pradhan Mantri Awas Yojana (PMAY), should be brought under the purview of section 80 IBA of Income Tax Act 2016, which will allow 100% deduction of profit derived from such business.
This can attract private developers to take up affordable housing construction on a large scale, feels the body.