The National Real Estate Development Council (NAREDCO) has proposed to the finance ministry the creation of a second instalment for the Special Window for Affordable and Mid-Income Housing (SWAMIH) fund, allocating Rs 50,000 crore in the forthcoming FY 2024-2025 budget.
They’ve also recommended additional budgetary aid and relaxations, such as enabling input tax credit within GST and offering incentives for rental housing, all geared toward meeting the goal of providing housing for all.
In their communication to Finance Minister Nirmala Sitharaman, NAREDCO reiterated its persistent plea to allow residential project developers the choice of claiming input tax credit on higher GST.
NAREDCO highlighted that since the implementation of RERA, there has been an improvement in cost estimation for projects. They emphasized that availing Input Tax Credit (ITC) would further enhance compliance, encouraging developers to minimize purchases from unregistered sources in the unorganized sector.
Addressing the tax implications related to notional income from housing properties held as stock-in-trade for over two years, G Hari Babu, president of NAREDCO, recommended revising Section 23(5).
The suggested amendment includes either eliminating the concept of ‘notional income’ or extending the timeline by five years before considering any notional income.
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As per Section 23(5), for unsold properties held as stock-in-trade, not leased out, the annual value becomes assessable as income from the property two years after the financial year in which the completion certificate was obtained. This assessment is based on the property’s hypothetical rental value.
The industry association proposed exempting the tax liability on notional rental income as a means to encourage rental housing across the nation.
Additionally, NAREDCO has put forward various taxation-related amendments. These include eliminating the Rs 2 lakh cap on interest deduction for housing loans under Section 24 of the Income Tax Act of 1961, aiming to stimulate housing demand.
Moreover, they suggested granting MSME status to projects meeting specific criteria and advocating for priority sector lending eligibility for real estate projects.
