CREDAI Proposes Rs 80 Lakh Cap for Affordable Housing to Benefit Homebuyers
The Confederation of Real Estate Developers’ Associations of India (CREDAI) has called for a revision in the definition of affordable housing, proposing that the cap be increased to Rs 80 lakh. CREDAI also suggests a 100 percent deduction on home loan int
Affordable HousingReal EstateCredaiHome LoansGstReal EstateNov 25, 2024
CREDAI also proposed that the definition of affordable housing be revised, with the price cap increased from Rs 45 lakh to at least Rs 75-80 lakh. Currently, under-construction affordable homes priced up to Rs 45 lakh attract a 1 percent GST rate, while homes above this threshold are taxed at 5 percent, with developers unable to claim input tax credit.
Irani explained that the affordable housing definition, introduced in 2017, set the Rs 45 lakh cap. Given the inflation since then, he argued that the cap should be raised to Rs 75-80 lakh. He added that prospective homebuyers would benefit from lower GST if the definition of affordable housing were updated. Irani further suggested that the government consider removing the price cap altogether and base the definition solely on the carpet area, maintaining the current limits of 60 square meters in metropolitan areas and 90 square meters in non-metropolitan areas.
Emphasizing the importance of reducing taxes to put more money in people’s hands, Irani stated that such a move would significantly boost demand for housing. CREDAI’s President-Elect, Shekhar Patel, called for a 100 percent deduction on home loan interest payments, replacing the current Rs 2 lakh exemption limit. Under Section 24 of the Income Tax Act, the deduction on interest for loans on self-occupied property is currently limited to Rs 2 lakh.
CREDAI Chairman Manoj Gaur also highlighted the lengthy approval process, with builders spending 12-18 months obtaining various government permits to develop real estate projects. He stressed the need to improve the ease of doing business in the sector. Founded in 1999, CREDAI represents over 13,000 real estate developers nationwide, advocating for policies that benefit the housing sector and homebuyers.
Frequently Asked Questions
What is CREDAI's proposal for the affordable housing cap?
CREDAI has proposed that the price cap for affordable housing be increased from Rs 45 lakh to at least Rs 75-80 lakh to benefit homebuyers.
What is the current GST rate for under-construction affordable homes?
Currently, under-construction affordable homes priced up to Rs 45 lakh attract a 1 percent GST rate, while homes above this threshold are taxed at 5 percent.
What is CREDAI's recommendation for home loan interest deduction?
CREDAI has suggested a 100 percent deduction on interest paid on home loans, replacing the current Rs 2 lakh exemption limit.
How long does it take for builders to obtain government permits for real estate projects?
Builders typically spend 12-18 months obtaining various government permits to develop real estate projects.
What is the current definition of affordable housing based on carpet area?
The current definition of affordable housing maintains the limits of 60 square meters in metropolitan areas and 90 square meters in non-metropolitan areas.
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