Our Prime Minister Narendra Modi ji during his address at the Madhya Pradesh Global Investors’ Summit 2023 said, “India’s Amrit Kaal has just begun, and we are all working together to build a developed India”. Incentivising Home Buyers, Supportive Policies for the “Housing-For-All” mission is a critical milestone to achieve in order to make India a 5 trillion dollar economy and a global powerhouse.
The pandemic has had a much bigger impact on the Affordable Housing Sector and the Housing Sector. The government should offer more incentives to make sure the affordable Housing vertical of Real Estate bounces back like the other sectors have.
The data from the Affordability Index concludes that the significant rise in the borrowing cost is beginning to dent the affordability of homebuyers to buy their new homes. An incentive that will allow the homebuyers to get a considerable amount of deduction of the interest component of their home loan from their total income would bring rejoice to the Homebuyers wherein the current deduction limit which is Rs. 2 lakhs can be increased to Rs. 4 Lakhs.
Personal tax relief, either by readjusting the income tax slabs or cut in tax rate will have remarkable effect on the overall sentiment for the Financial Year 2023-2024 with more disposable income in their hands.
A reduction in the current 20 per cent capital gains tax to 10 percent would be ideal from an investor’s perspective, moreover, the cap of Rs. 2 Crore on capital gains for reinvesting in two properties should be removed to further build momentum. Additionally, in order to boost the sentiments of the homebuyers towards the residential housing sector, the rent from a non-self-occupied second property, regardless of whether it is given on rent or no, should not be taxable.
Also, reduction in the house property holding period to 12 months from the existing 24-36 months should be qualified as long-term capital asset for an investor.
Buying Real Estate in a Registered Project under Real Estate Regulatory Authority (RERA) should be rewarded in some form of incentive for the home buyer, which can be an additional deduction if a homebuyer buys her/his new house in a RERA registered project. This will also encourage developers to register their projects with the authority.
The affordable price point of Rs. 45 lakhs per unit which defines a homebuyer as an “affordable homebuyer” and take the prevailing benefits attached with it should be increased as having a real estate at this price point in the major metropolitan or tier 1 cities is difficult. This would mean a homebuyer buying a real estate property is deprived from taking the benefits of government subsidies and lower Goods and Services Tax.
To aid the distressed Real Estate Projects, the Government should increase the Rs. 5,000 crore allocations to Rs. 50,000 crore which will boost the residential housing vertical.
Under the One Nation One Tax initiative the rate of income tax for firms, LLPs and other structures to be unified. Single Window Clearance and granting “Infrastructure Status” to the Real Estate Vertical can prove to be growth engine for our economy.
