CREDAI Seeks 100% Tax Deduction on Home Loan Interest to Stimulate Housing Demand
CREDAI, the apex body of real estate developers in India, has urged the government to increase the affordable housing price cap and reduce GST on under-construction homes to boost demand, especially in the affordable and mid-income segments. The organizat
CredaiHome Loan InterestAffordable HousingReal EstateGstReal Estate MumbaiNov 25, 2024
Proposals by CREDAI
100% Tax Deduction on Home Loan Interest
CREDAI is advocating for a 100% tax deduction on interest paid on home loans under the Income Tax Act. Currently, the deduction allowed under Section 24 of the Income Tax Act is limited to Rs 2 lakh. CREDAI's President-Elect, Shekhar Patel, believes that this change will significantly accelerate demand for housing.
Revising the Affordable Housing Price Cap
The organization is also urging the government to increase the cap on affordable housing from Rs 45 lakh to Rs 75-80 lakh. This increase is necessary to account for inflation since the cap was set in 2017. Boman Irani emphasized that if the cap is not revised, the affordability of homes will continue to decrease, deterring potential homebuyers.
Reducing GST on Under-Construction Homes
CREDAI suggests reducing the GST on under-construction homes costing up to Rs 75-80 lakh to 1%. Currently, there is a 1% GST on under-construction affordable homes priced up to Rs 45 lakh, and homes costing above Rs 45 lakh attract a 5% GST. Irani believes that lowering the GST will make homes more affordable and attract more buyers.
Additional Recommendations
Alternative Definition of Affordable Housing
CREDAI is also proposing an alternative definition of affordable housing. Instead of a price cap, the organization suggests that the only criteria should be the carpet area of 60 square meters in metros and 90 square meters in non-metros. This change would simplify the criteria and make it more flexible.
Improving Ease of Doing Business
CREDAI Chairman Manoj Gaur highlighted the need to streamline the process of obtaining government approvals for real estate projects. He noted that developers often spend 12-18 months securing these approvals, which can delay project timelines and increase costs.
on CREDAI
Established in 1999, CREDAI is the apex body representing real estate developers in India. With over 13,000 members across the country, CREDAI plays a crucial role in advocating for the interests of the real estate sector. The organization is committed to promoting sustainable and affordable housing, improving the business environment, and enhancing the quality of life for homebuyers.
Conclusion
By implementing these proposals, the government can significantly boost demand in the housing market, particularly in the affordable and mid-income segments. This, in turn, will not only benefit homebuyers but also stimulate economic growth and development in the real estate sector.
Frequently Asked Questions
What is CREDAI?
CREDAI, or the Confederation of Real Estate Developers' Associations of India, is the apex body representing real estate developers in India. Established in 1999, it has over 13,000 members and works to promote sustainable and affordable housing, improve the business environment, and enhance the quality of life for homebuyers.
What is CREDAI's main proposal to boost housing demand?
CREDAI's main proposal is to provide a 100% tax deduction on interest paid on home loans under the Income Tax Act. This is aimed at putting more money in the hands of potential homebuyers and stimulating demand in the housing market.
Why is CREDAI urging the government to increase the affordable housing price cap?
CREDAI is urging the government to increase the affordable housing price cap from Rs 45 lakh to Rs 75-80 lakh to account for inflation since 2017. This increase will make more homes eligible for affordable housing status and attract more buyers.
What is CREDAI's suggestion regarding GST on under-construction homes?
CREDAI suggests reducing the GST on under-construction homes costing up to Rs 75-80 lakh to 1%. Currently, there is a 1% GST on homes priced up to Rs 45 lakh and 5% GST on homes costing more. Lowering the GST will make homes more affordable and attract more buyers.
How does CREDAI plan to improve the ease of doing business for developers?
CREDAI is advocating for streamlining the process of obtaining government approvals for real estate projects. Currently, developers spend 12-18 months securing these approvals, which can delay project timelines and increase costs. Simplifying this process will improve the ease of doing business and boost the real estate sector.
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