CREDAI Demands Rs 80 Lakh Cap on Affordable Housing to Boost Homebuyers
CREDAI, the apex body for real estate developers, has called for a revision of the definition of affordable housing to include properties priced up to Rs 80 lakh. They also propose a 1 percent GST rate and a 100 percent deduction on home loan interest to
Affordable HousingReal EstateCredaiGstHome Loan InterestReal Estate NewsNov 25, 2024
Current Definition and Tax Implications
Currently, under-construction affordable homes priced up to Rs 45 lakh are subject to a 1 percent GST rate. Homes priced above this threshold face a 5 percent GST, and developers are unable to claim input tax credit. Irani explained that the affordable housing definition, introduced in 2017, set the Rs 45 lakh cap. However, inflation over the past few years has made this cap unrealistic, necessitating an increase to Rs 75-80 lakh.
Proposed Changes and Benefits
Irani suggested that the government should apply a 1 percent GST rate to under-construction homes priced up to Rs 75-80 lakh. This would not only make homes more affordable but also put more money back into the hands of prospective homebuyers. He also proposed removing the price cap entirely and defining affordable housing based solely on the carpet area. The current limits are 60 square meters in metropolitan areas and 90 square meters in non-metropolitan areas.
Tax Deductions and Loan Interest
To further boost demand, CREDAI’s President-Elect, Shekhar Patel, called for a 100 percent deduction on home loan interest payments. Currently, under Section 24 of the Income Tax Act, the deduction on interest for loans on self-occupied property is limited to Rs 2 lakh. Patel argued that increasing this limit would significantly enhance the purchasing power of homebuyers.
Streamlining the Approval Process
CREDAI Chairman Manoj Gaur highlighted the lengthy approval process, which often takes 12-18 months for builders to obtain various government permits. He stressed the importance of improving the ease of doing business in the real estate sector to attract more developers and reduce project timelines.
About CREDAI
Founded in 1999, CREDAI represents over 13,000 real estate developers across India. The organization is committed to promoting ethical practices, advocating for policy changes, and enhancing the overall growth of the real estate sector.
Frequently Asked Questions
What is the current price cap for affordable housing in India?
The current price cap for affordable housing in India is set at Rs 45 lakh.
What is CREDAI's proposed new price cap for affordable housing?
CREDAI has proposed increasing the price cap for affordable housing to Rs 75-80 lakh.
What is the current GST rate for under-construction affordable homes?
The current GST rate for under-construction affordable homes priced up to Rs 45 lakh is 1 percent, while homes above this threshold are taxed at 5 percent.
What additional tax benefits is CREDAI requesting for homebuyers?
CREDAI is requesting a 100 percent deduction on home loan interest payments, replacing the current Rs 2 lakh exemption limit.
How does CREDAI propose to define affordable housing?
CREDAI proposes to define affordable housing based solely on the carpet area, maintaining limits of 60 square meters in metropolitan areas and 90 square meters in non-metropolitan areas.
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