The home loan/real estate sector is an important part of the Indian economy and is facing some challenging times due to the rising interest rates. Given that, experts want government to announce some measures in Budget 2023 so that the road to recovery can be smooth. The most anticipated expectations of the sector are increase in deduction limit for interest payments and principal amount on home loans, easing in some tax sops, GST structure, and capping in limits for home buyers.
Live TV
Loading...
Here are the top expectations of the sector:
Hike tax rebate on home loans
To foster growth in the sector, industry experts think that lenders need to offer competitive loan products with sensible pricing and attractive repayment terms. This can help the sector stay competitive and provide budget certainty to the customers.
"Also increasing interest rates can have a major impact on the home loan and real estate sectors, making affordability a major concern for buyers. The government needs to take steps such as hiking the tax rebate on housing loan interest under Section 24 (b) to Rs 5 lakh. Also, the current price band of Rs 45 lakh for a property to be considered under affordable housing is not appropriate in most of the cities in India, it should be increased to Rs 75 lakh or
more," said Atul Monga, CEO at BASIC Home loan.
ALSO READ | Budget 2023 may see reduction in income tax rates — more reliefs likely for the middle class
Restore ITC
The current GST structure for under-construction and affordable housing creates an additional burden on developers, leading to a higher cost of properties for buyers. This leads to a higher price of a house because the GST on steel and cement is 18 percent and 28 percent, respectively and developers cannot claim tax credits for GST paid on input items.
To reduce this burden and increase the affordability of properties, Monga thinks the government can consider restoring Input Tax Credit (ITC) in the upcoming budget. Further, capping GST at 1 percent for under-construction projects and reducing raw material costs such as cement and steel can help encourage more people to buy affordable homes.
ALSO READ | Budget 2023 | Mutual Fund industry body demands units to be classified as specified long term assets
"This will not only enable developers to reduce the prices of properties but also increase the availability of affordable housing for buyers. This is to ensure that housing remains accessible and affordable for people across income groups, otherwise, it could lead to unease in the markets," he said.
Incentivise first and second home purchases
Sachin Chopda, Managing Director at Pushpam Group calls upon the government to incentivise first and second home purchases with adequate tax breaks.
"This would broaden the scope of the home buyer base, bringing in much needed liquidity into the sector," he said.
Bring relief in affordable property segment
Chopda wants government to consider increasing the cap of Rs 2 lakh per annum to at least Rs 5 lakh against interest rate deduction under section 24(b) of the Act
". This will be a big relief to home buyers in the affordable property segment. Additionally, removing or increasing the 45 lakh cap in the affordable housing segment for metro cities would be advisable. This considering that construction costs and other allied materials are rising and so is the cost of buying a home." he said.
Also, Chopda thinks that government should revise the cap up to Rs 1 crore in the metro cities for first time home buyers in the affordable housing category to those availing credit link subsidy scheme benefits.
First Published: Jan 29, 2023 6:11 PM IST
Check out our in-depth Market Coverage, Business News & get real-time Stock Market Updates on CNBC-TV18. Also, Watch our channels CNBC-TV18, CNBC Awaaz and CNBC Bajar Live on-the-go!
Lok Sabha election 2024: A SWOT analysis of DMK vs AIADMK in Tamil Nadu
Apr 19, 2024 1:22 AM
Exclusive: FM Nirmala Sitharaman says poverty alleviation can't be achieved by throwing money at the problem
Apr 18, 2024 7:27 PM
Tamil Nadu Lok Sabha elections 2024: List of Congress candidates
Apr 18, 2024 4:33 PM
Will the payment under PM-KISAN be increased? Here's what Finance Minister said
Apr 18, 2024 3:58 PM