Pre-Budget Quotes from Consultancy

Mr. Amit Goyal, CEO, India Sotheby’s International Realty

Right at the top of the industry's wishlist has been the enhancement of the income tax deduction limit against home loans. The current deduction limit of Rs. 2 lakh per annum has remained unchanged for several years. We hope Finance Minister Nirmala Sitharaman will accept this demand and raise the tax offset on home loan interest to at least Rs 5 lakh.  This single move has the potential to boost India's housing market and, in turn, accelerate economic growth.

Also, the difference of more than 10% between the circle rates and agreement values of properties translates into tax penalties under Section 43CA of the Income Tax Act. The government must appreciate that the difference between the circle rate and actual price is much higher in certain areas of Delhi and other parts of the country. Hence, the government should consider extending the relief to up to 20% of the difference.

The other pain point is the applicable tax deducted at source (TDS) on property transactions for NRIs. IT is way too high and should be reduced from the current 28.49%, as the refund process still takes significantly longer.

Kanika Gupta Shori, Founder and COO, Square Yards

The real estate sector is upbeat about the Budget 2022 and expects that a good handholding from the government can put the industry on a strong footing in the coming months. Property stakeholders want the standard Rs 2 lakh tax deduction on interest paid on home loans to be increased to Rs 5 lakhs as it will bring more salaried people in the bracket and help them realize their dream of buying a home. This decision will also keep the housing demand healthy and help property developers recover from the losses and increase their wafer-thin profit margins. With prices of raw materials hitting the roof, property developers want a GST waiver or reduction on construction materials. The long-standing demand of awarding industry status to the real estate sector is also expected from this budget. Lastly, there should be a stay on stamp duty deductions in tier 1 and tier 2 cities as it will push more homebuyers towards home ownership and help developers offload pending inventory.

Ajay Sharma, Managing Director, Valuation Services, Colliers India.  

“Real estate sector witnessed a period of recovery which is likely to be derailed by the current pandemic wave. Given that the inflation-related risks are likely to shape the monetary policy of the central bank, an increase in US federal bank rates will accentuate the cash outflow from markets and that the period of statutory concessions extended to both buyers, developers and other stakeholders in the market will lapse, the immediate focus will be on how to ensure any resultant shock will be cushioned through fiscal measures thereby providing more cash in hand for all stakeholders. This should be led by extending the tax concessionary benefits pertaining to affordable housing, increasing tax set-off for housing loan interest payment under sections 24, 80EE and specifically increasing the standard deduction which could increase the cash available through savings for taxpayers. These combined with more specific curative measures like long-term capital gains period be reduced for REITs and increase the total deduction available under 80C where the home loan principal repayment deduction is allowed, will increase investment into real estate. Apart from these, the budget should focus on bringing all housing segments under one single GST slab while extending additional benefits to affordable housing to the buyers through tax concessions thereby sustaining the momentum for affordable housing and at the same time increasing growth of other housing segments through GST relief to developers. Though not directly related, the Budget should relook at the capital gains taxation of the profits arising from the transfer of shares (held as an investment) in entities holding immovable assets especially in M&A where sick units with assets are being taken over either from insolvency or SARFESI based resolutions. This could free capital for entities in real estate business which could be reinvested for newer ventures and promote the growth of the sector”