Real estate developers want hike in tax deduction limit on home loans in Union Budget 2022

Real estate builders want the limit of tax deduction given to home loan borrowers to be increased from the current Rs 2 lakh to Rs 5 lakh. The industry also wants a review of the definition of affordable housing, lower long-term capital gains tax for real estate sector and new provisioning for rent housing scheme in the Union Budget 2022-23.

According to an Economic Times report, Credai, the real estate industry body, in a letter to the Finance Ministry, also urged for a deduction in tax for investments on Real Estate Investment Trusts (REITs). It also demanded tax-neutral consolidation of businesses through the merger of amalgamation “to help homebuyers caught in stalled housing projects.”

Harshvardhan Patodia, president, Credai said he expects the upcoming budget to provide a much-needed boost to the infrastructure development by introducing various relaxations and extensions. Patodia said the industry wants the finance ministry to hike the deduction limit for homebuyers for tax rebates under Section 24B.

An amendment to Section 80C of the Income Tax Act, 1961 in order to increase the time limit for repayment of housing loan principal or alternatively introduce a section for deduction in the context of housing loan principal repayments; these are some of the key budget expectations of developers from the finance ministry, the report added.

Deepak Goradia, president of, Maharashtra Chamber of Housing Industry told ET that real estate should be brought under infrastructure status which will bring a number of tax benefits for the sector and increase participation of foreign and local investment and lead to an overall rise in demand.

Developers want changes to the definition of ‘affordable housing’ which takes into account the ticket size of the apartment instead of area. Also, new provisions for encouraging rental housing, single-window clearances and input tax GST credit for developers are some of the other key demands.