By Gaurav Karnik
As the pandemic engulfed the Indian economy in the early aspect of 2020, there was a extreme influence on the housing sector. Since the lifting of the lockdown, there have been handful of green shoots in the residential segment. These have been facilitated by cuts in stamp duty prices by states, such as Maharashtra, and interest prices for housing becoming at historic lows. Keeping the government’s stated objective of Housing for All by 2022, a sub-segment that has and will require focus in the forthcoming spending budget is economical housing. In this connection, it is recommended that the final date for availing the Pradhan Mantri Awas Yojana (PMAY) Credit-Linked Subsidy Scheme (CLSS) each for the MIG-I and MIG-II categories be extended to March 31, 2022, as is the case with the scheme for LIG/ EWS category.
The period for availing the more deduction of up to Rs 1.5 lakh for interest paid on loans borrowed for the acquire of an economical property valued up to Rs 45 lakh, ought to be extended to March 31, 2022, and, at the similar time, raise the worth of homes eligible for such deduction from Rs 45 lakh to Rs 90 lakh, specially in the metro cities. To sustain the housing demand, the Centre ought to take into account extending rewards below centrally sponsored schemes such as the Jawahar Urban Renewal Mission to States which reduces stamp duty prices or reduces nearby levies on the housing segment specially with respect to economical housing. Further, the tax vacation below Section 80IBA of the Act ought to be extended to projects authorized up to March 31, 2023 as meeting the existing deadline of March 31, has been severely impacted by the pandemic.
Given the liquidity difficulties in the sector, landowners have been getting into in collaboration agreements. Accordingly, provision of capital gains arising from the transfer of improvement agreements becoming taxable in the year in which completion certificate is issued ought to be extended to all taxpayers like corporates and not be restricted to folks and HUFs.
Further section 23(5), which gives for taxation of home that remains unsold for two years from the monetary year in which completion certificate is obtained on a notional basis, ought to be deleted to lower developers’ monetary burden with big amounts of unsold inventory.
Deduction presently readily available below Section 24 of up to Rs 2 lakh for interest on loans availed for acquisition/building of self-occupied property ought to be enhanced to at least Rs 5 lakh per annum. In addition, the limit on losses below the head property home readily available to be set off against revenue of any other head of Rs 2 lakh ought to be either be removed or enhanced to Rs 5 lakh pa. Simultaneously, offered that migrant workers have gone back to their residences throughout the pandemic leaving homes vacant, the provisions relating to attribution of notional revenue to vacant properties ought to be relooked.
The housing sector is particularly critical from a contribution to GDP as effectively as employment point of view. Accordingly, the governments continued help to the sector will be most welcome as the Indian economy appears to recover from the pandemic in the next handful of quarters.
The author is Partner and National Leader, Real Estate, EY India.Views are private