Budget tax sops to boost housing demand: Credai

NEW DELHI: The Confederation of Real Estate Developers’ Associations of India (Credai) has suggested that the government should increase tax exemptions in the upcoming Budget to boost housing demand and enhance limit of deduction under section 80C of Income Tax Act for principal repayment on home loans.

The apex realtors’ body also said that there should be a separate exemption for principal repayment on home loans.

The Budget for financial year 2021-22 will be presented on February 1.

Credai, which has around 20,000 members from across the country, also recommended tax incentives to boost investment in real estate investment trusts (Reits).

“Real estate sector has been under stress for more than 2 years. Economic uncertainty enforced by Covid-19 pandemic has only made it worse for the sector. After battling for survival, the sector is slowly moving towards revival,” Credai said. The association said that ensuring liquidity, access to funds and longer repayment cycles will help developers. It sought cheaper home loans and tax benefits on investments in housing to boost demand. “Reforms in taxation related to affordable housing, joint development and steps to promote foreign investment are the need of the hour,” Credai said.

As per the present provision, the ceiling of deduction for principal repayment of housing loan is ₹1,50,000 and the deduction is clubbed with other tax saving instruments.

“We suggest that the deduction under section 80C for principal repayment of housing loan should be increased from existing limit of ₹1,50,000. The deduction for principal repayment of housing loan can be considered for a separate or standalone exemption,” Credai said.

An increase in deduction for principal repayment of housing loan will encourage the home buyers to invest in homes, it said.

Credai suggested that investment of up to ₹50,000 in REITs should be allowed as deduction under Section 80C.