Ahead of the presentation of full-year Budget 2019 next month, industry body Assocham has made a number of recommendations to the government aimed at boosting the real estate sector. In its pre-Budget memorandum to the government, Assocham has recommended an increase in interest deduction on home loan to Rs 5 lakh from the current Rs 2 lakh. Such a move by the government will lead to a boost in the real estate sector and incentivise taxpayers, the trade body has said.
It has also suggested that the quantum of set-off of losses from self-occupied or rented house property against other heads of income to be increased to Rs 5 lakh from the existing Rs 2 lakh.
As per current tax laws, a maximum deduction of Rs 2 lakh is available from gross taxable income on interest payment of a loan for a self-occupied property. This limit is not in harmony with the interest burden borne by taxpayers given the substantial increase in housing prices, Assocham added.
The trade body has also recommended incentivisation for rental housing in view of the government’s “Housing for All” target, which aims at providing affordable housing to the urban poor by March 31.
Assocham listed the following measures to incentivise rental housing:
- Income from renting of house properties should be taxed at a flat rate of 10 per cent
- Income of firms wholly-engaged in maintenance/repair and other specified management services for rental housing blocks may be brought within the ambit of Section 80- IBA of the Income Tax Act
- Deduction from rental income under Section 24(a) be increased to 50 per cent from 30 per cent
- Rental income in respect of housing units with up to 90 square metres of carpet area be totally exempt from income tax
Assocham also said in its pre-Budget memorandum that “deduction on account of interest payment available under Section 24(b) should be made applicable from the year in which the capital was borrowed and should be to the extent of full interest paid, at least in respect of one house”. The five year period for acquisition or completion from the year of borrowing should be dispensed with, it noted.
“This will provide much needed impetus to housing sector which is reeling under huge housing shortage and relief to consumers, in view of delayed projects due to cash flow.”
Source: NDTV Profit