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regular-article-logo Thursday, 29 February 2024

Realty seeks IT relief to boost sales

Demand for affordable housing has fallen sharply last year, according to an Anarock survey

R. Suryamurthy New Delhi Published 31.01.23, 01:35 AM
In 2018, nearly 39 per cent of property seekers in the top seven cities were keen on affordable homes priced within Rs 40 lakh.

In 2018, nearly 39 per cent of property seekers in the top seven cities were keen on affordable homes priced within Rs 40 lakh. Representational picture

The realty sector expects finance minister Nirmala Sitharaman to announce a slew of measures in the budget — including softening input costs load, benefits to boost demand in the mid-and affordable-segment and a separate deduction for the principal loan repayment sum.

Demand for affordable housing has fallen sharply last year, according to an Anarock survey. In 2018, nearly 39 per cent of property seekers in the top seven cities were keen on affordable homes priced within Rs 40 lakh.

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This has shrunk to its lowest levels in 2022, with just 26 per cent looking to buy in this budget segment. The leading cities have a significant amount of unsold housing stock.

Of the nearly 6.30 lakh unsold units in the top seven cities by 2022-end, affordable housing accounted for over 27 per cent. Demand has remained low for this segment since the pandemic, and the government needs to revitalise it on a priority basis.

“One possible way the budget can intervene is by revising the price bandwidths for homes that qualify as affordable housing, as per the specific market dynamics of different cities,” Anuj Puri, chairman — of Anarock Group, said.

“The size of units that qualify for various affordable housing benefits is currently 60 square metres on carpet area. While this is appropriate, the uniform price band of up to Rs 45 lakh for affordable housing is not aligned with the market realities of most major cities,” he said.

Relief in the form of income tax exemption on housing loans is another demand in the real estate sector.

Buyers can now get income tax deductions for stamp duty and registration fees paid to purchase the residential property. But the amount is included in the total exemption limit of Rs 1.5 lakh under section 80C of the Income Tax Act.

This is applicable for ready-to-movein properties and not to under-construction houses. Additionally, taxpayers can claim deductions up to Rs 2 lakh on the interest paid on home loans under section 24(b) of the Income Tax Act. Experts believe that a further increase is due to the exemption limit and the real estate sector is hopeful of a positive outcome in the budget.

Niranjan Hiranandani, vice-chairman, Naredco (National Real Estate Development Council), said: “Developers should be encouraged to create surplus rental housing with tax incentives. Industry recommends an increase in standard deduction in rental housing up to 50 per cent and incentivise service rental apartments by allowing accelerated depreciation. Also, tax on notional income from house property held as stock in trade needs to be waived.”

A marginal drop in GST rates on construction materials could indirectly help the sector by reducing input costs and making the housing units more affordable to buyers.

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