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NAREDCO recommends measures for India budget

To support green shoots in Real-estate

NAREDCO recommends measures for India Budget

In the aftermath of Covid-19 pandemic, Indian economy grapples with the challenges of recovery, expectations from the upcoming Union Budget are high. As a generator of jobs (14 per cent) and a major contributor to the GDP (7 per cent), the real estate sector is optimistic about seeking major reforms with timely policy interventions by the government to mitigate the negative impact and stimulate the growth engine.

As work and residential spaces evolve to meet the ‘New Normal’ requirements, real estate looks forward to a union budget in sync to meet their long-standing industry demands. As pandemic life has resurfaced owning a house, the need to meet ‘Housing for All’ demand must comply with innovative fiscal impetus and robust outlays.

The ‘wish list’ for Union Budget 2021 presented by India’s apex real estate body NAREDCO, includes measures to combat the economic crisis and result in upward growth trend -: –

Rationalisation of Tax

Enhancing loan to value (LTV) ratio up to 90 per cent across the board for home loans for affordable houses of Rs- 30 lakh or less and the same facility should be extended to MIG and HIG. Allowing interest on home loans for income tax deductions without any ceiling, current interest deduction under section 24 of IT Act 1961 on Rs’ housing loans of Rs. 2 lakhs should be removed to incentivise home buyers. Bring long term capital gains at 10 per cent (on par with the provision of section 112 for equity shares; and reducing the period of holding house property to up to 12 months from existing 24/36 months to qualify as a Long-term Capital asset is need of an hour.

 Affordable Rental Housing

Two segments, rental & affordable housing need impetus in this budget. For rental housing, enhancement in HRA Tax Exemption; an increased depreciation rate for the rental projects like in Commercial buildings and allowing ‘carry on’ of loss from rental income will make a difference. Similarly, affordable housing will benefit from increasing completion period to six years; while enabling concessional lending rate for Affordable Housing Projects. Extending the Credit Linked Subsidy Scheme (CLSS) for all segments will support home buyers.

To promote Rental Housing, The deduction of 30% from the annual rental income (for maintenance) should be increased to 50%. This will improve ROI and encourage citizens from investing in residential properties for giving on rent.

SWAMIH Stress Fund

The laudable initiative of establishing the SWAMIH fund for Rs 25000 cr to help the real estate sector is appreciated. However, allowing more such stress funds will help facilitate the last mile funding for stressed and stalled projects. Industry demands estimated Rs 1,25,000 cr via many HFCs / NBFCs ready to establish such funds for ailing real estate sector. This will allow for faster appraisals and sanctions.

Liquidity Measures

One Time Restructuring of Loans will play an important role – the unit’s requirement being ‘standard unit’ if done away and restructuring permitted for all units as per mutual agreement with the financing enterprise. The borrower would positively impact.


Allowing External Commercial Borrowings for the real estate sector and reforms for Special Economic Zones, including extending notification date for IT/ITeS SEZs and withdrawal of MAT will go a long way in ensuring green shoots real estate.

Subvention Scheme

Lifting, the ban on subvention schemes, needs to be reconsidered for the home buyers’ direct benefit.

Dr Niranjan Hiranandani, National President, NAREDCO said, “The on-going Covid-19 pandemic has impacted global economies, and Indian real estate is not spared from the depths of despair. The fiscal impetus announced under Aatmanirbhar Bharat has led to renewed consumer demand that led to the emergence of green shoots in the Indian economy and real estate sectors. The laudable measures like tax rationalization, additional stress fund, ample liquidity tools will keep the momentum going and propel India towards a $5 trillion economy. Towards this goal, NAREDCO seeks to work hand-in-glove with the government to achieve this ambitious goal.   

Mr Rajeev Talwar, Chairman, NAREDCO said, “Interest on housing loans should be fully allowed under Income Tax Deduction without any ceiling. The current limit of interest deduction under Section 24 of IT Act 1961 on the housing loan of INR 2 lac should be removed to incentivise home buyers and spur overall demand. Also, loss from house property should be fully allowed to be adjusted against other heads of income. In case of unadjusted loss, it should be fully allowed to be carried forward to subsequent years.”

“The RBI, through a notification in 2017, allowed a loan-to-value ratio (LTV) of up to 90% for home loans for affordable houses of Rs 30 lakh or less. The same facility should be permitted for other housing including MIG and HIG as well,” added Mr Talwar.

Revival is a bigger challenge as compared to maintaining organic growth levels. Real estate looks forward to continued government support; a helping hand to sail through the current difficult scenario.

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