Real estate body CREDAI has proposed a higher deduction threshold for home loan interest repayment from Rs. 2 lakh to Rs. 5 lakh, citing the steady rise in interest rates from May onwards. Rates have jumped up by close 2 percentage points over the last 7 months, touching 8.5%, with the repo rate being hiked by 225 basis points in this period.
CREDAI has stated that home loan EMIs have increased due to this hike, mentioning how there is a pressing need to enhance the deduction limit to Rs. 5 lakh, which will give more income in the hands of middle-income buyers while also drawing more people towards home ownership. CREDAI has recommended this measure as a means of boosting the realty sector, which is one of the biggest contributors to the country’s GDP and sustains innumerable livelihoods in the country.
CREDAI has also proposed a revised cap of the price limit for qualifying as affordable housing, from Rs. 45 lakh earlier. It has also proposed 100% exemption of rental income till Rs. 20 lakh annually, which will encourage more investments in rental units. CREDAI is the representative of 13,000+ developers throughout 21 States and 221 city chapters. More tax sops are needed according to experts, particularly in the mid-income and affordable housing categories. Some experts also bat for more institutional support measures for projects which are stalled, along with a further push towards the affordable housing category.
Co-Founder and CFO at Square Yards, Piyush Bothra, stated that the Rs. 45 lakh cap for affordable homes should go up to Rs. 80 lakh in metro cities and also Rs. 60-65 lakh in non-metro cities, enabling more buyers to benefit from lower rates of GST and other Government subsidies and tax deductions offered on home loans. The increase in tax deductions from Rs. 2 lakh to Rs. 5 lakh under Section 24 will also boost the affordable housing segment according to several experts.
