Realtors' apex body Confederation of Real Estate Developers' Associations of India on Monday asked the government to give a 100% deduction on interest paid on home loans under the Income Tax Act to boost demand for affordable and mid-income housing.
CREDAI, which is celebrating 25th foundation day, also demanded that the definition of affordable housing should be revised, increasing the cap from Rs 45 lakh to at least Rs 75-80 lakh.
Addressing a press conference here, CREDAI President Boman Irani suggested that the government should charge 1% Goods And Services Tax on under-construction housing properties, costing up to Rs 75-80 lakh each, to boost demand for affordable and mid-income housing.
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At present, there is 1% GST on under-construction affordable homes priced up to Rs 45 lakh each.
Under-construction homes costing above Rs 45 lakh per unit attract 5% GST. Developers can not avail of input tax credit.
"Affordable housing definition came up in 2017 which put a cap of Rs 45 lakh. If we just consider annual inflation since 2017, this cap needs to be revised upwards to Rs 75-80 lakh," he said.
Irani said prospective homebuyers will get benefit of lower GST if the affordable housing definition is changed.
The CREDAI President said the government should consider another option and completely do away with the price cap in definition of affordable housing and the only criteria should be the existing carpet area of 60 metres in metros and 90 metres in non-metros.
Irani also stressed on "putting more money in the hands of people by reducing the taxes".
CREDAI's President-Elect Shekhar Patel said there should be a 100% deduction on interest paid on home loans instead of the current exemption of Rs 2 lakh.
Irani said the 100% deduction will accelerate demand in a big way.
Under Section 24 of the Income Tax Act, the deduction allowed on interest on loans for self-occupied property is limited to Rs 2 lakh.
CREDAI Chairman Manoj Gaur pointed out that builders devote 12-18 months to obtaining various government approvals to develop real estate projects.
"There is a need to improve ease of doing business," he added.
Established in 1999, Confederation of Real Estate Developers' Associations of India has more than 13,000 members from across the country.
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