The real estate sector is looking to start off 2022 on a strong note after suffering losses in the previous two years due to the impact of the Covid-19 pandemic on the overall economy. To achieve a strong recovery this year, the sector needs strong demand from homebuyers.
The sector looks forward to support beyond the mainstay demands of industry status, easy availability of finance, and GST rates reduction in the upcoming Union Budget 2022 from Finance Minister Nirmala Sitharaman.
Homebuyers are also expecting some positive measures in this year’s budget, primarily focused on tax benefits. Here is a look at some of the expectations:
HIKE HOME LOAN DEDUCTION LIMIT
There is a need to hike the Rs 2 lakh tax rebate on housing loan interest rates under Section 24 of the Income Tax Act to at least Rs 5 Lakh. This could instantly infuse robust demand for housing, especially in the affordable and mid-segment categories, said Anuj Puri, Chairman – ANAROCK Group.
DEDUCTIONS FOR HOME LOAN PRINCIPAL REPAYMENT
Personal tax relief, either via a cut in tax rates or revised tax slabs, would be a welcome move – especially since the last increase in the deduction limit under Section 80C (to Rs 1.5 lakh per year) took place in 2014, Puri added.
REDEFINE AFFORDABLE HOUSING CRITERIA
The sector expects the budget to broaden the scope of affordable housing and include homes up from Rs 45 lakh to Rs 75 lakh in the section. By expanding the scope of affordable housing, the budget can enable more buyers to take advantage of the schemes for the sector and attract more buyers, Harpreet Singh Hora, Group Director, Realistic Realtors said.
OTHER TAX SOPS
In the present scenario, the developers are compelled to add the Goods and Services Tax (GST) paid on construction cost to the total cost of sale. In the upcoming Union Budget 2022, if the government allows the builders to set off the GST at least to the extent of collection against the payment made by them on construction cost, customers would benefit and the increased sales in the sector can be witnessed, said Gururaj Bhat, Chief Finance Officer, Karle Infra Pvt. Ltd.
EXTEND BENEFITS OF AFFORDABLE HOUSING
Affordable and rental housing got a big boost in the last budget, with the government extending the period for extra deduction of Rs 1.5 lakh for loans up to March 31, 2022. A further extension of this benefit will ensure buoyant demand for affordable housing in 2022. Further, extending the tax holiday for affordable housing projects by another year will help bring in more new supply within this segment, Anuj Puri said.