Delhi [India], December 17 : The National Real Estate Development Council (NAREDCO) has suggested the Union finance ministry come up with the second tranche of the Special Window for Affordable and Mid-Income Housing (SWAMIH) fund in the upcoming budget for the financial year 2024-2025.
In a letter to Union Finance Minister Nirmala Sitharaman, as part of its pre-budget recommendations by the apex real estate body, it further sought other budgetary support and relaxations, including allowing input tax credit under GST and incentives for rental housing, in order to achieve "housing for all."
Noting that the SWAMIH fund has played a critical role and unlocked liquidity, leading to renewed interest among investors, both foreign and domestic, in the Indian real estate sector, the industry body has requested the government create a second tranche of the SWAMIH fund with a corpus value of Rs 50,000 crore.
As the ultimate beneficiaries of the fund are the home buyers who have been able to take delivery of their long-stuck dream homes, extension of the lending scheme would be a win-win scenario for both the industry and buyers, the real estate industry body argued.
The industry body reiterated its long-standing request for allowing the option of claiming input tax credit by residential project developers with higher GST. In its letter to the finance minister, NAREDCO said that after the introduction of real estate regulation act (RERA), accounting has improved with regard to ascertaining the project cost.
It said that input tax credit (ITC) would also help in enhancing compliance as it would encourage developers to reduce unorganised sector purchases from unregistered persons.
Elucidating the tax burden due to the concept of notional income from housing property held as stock in trade after two years, G Hari Babu, President, NAREDCO suggested abolishing 'notional income' or increasing the timeline by five years for considering the notional income.
Under Section 23(5) in case of unsold property held as stock-in-trade, which is not let out, the annual value of the property after a period of two years post the financial year in which completion certificate was received will be assessable as income from the property on the basis of its notional rent.
"Due to three waves of Covid and subsequent lockdowns since two years and consequential impact on the economy, many tenants who were occupying offices and shops have either closed down or negotiated rentals and have paid zero or minimum rentals," it noted.
It recommended that in order to incentivise rental housing in the country, the tax burden on notional rental income should be exempted.
Further, in a bid to help real estate projects get better liquidity, the industry body has also sought MSME status to projects with the required parameters and also allowing priority sector lending for real estate projects.
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