Developers expect help from the government in the Union Budget 2022 at a time when the real estate sector is seeing a smart recovery following the COVID-19 blow.

According to media reports, real estate developers expect the government to relax long-term capital gains tax on real estate, raise the ceiling of home loan interest deduction for a tax rebate from Rs 2 lakh to Rs 5 lakh, redefine affordable housing, provide GST waiver or reduction on raw materials and new provisioning for rental housing in the upcoming budget.

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One of the primary ideas given by real estate developers to the government is to amend Section 80C of the Income Tax Act of 1961 to increase the ceiling for repayment of housing loan principal, reported Economic Times.

Deepak Goradia, head of the Maharashtra Chamber of Housing Industry, suggested that real estate be granted infrastructure status in the 2022 budget, unlocking several tax benefits to stimulate global and domestic investment.

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Following the pandemic, the real estate sector is anticipating that the government would increase the Rs 2 lakh tax rebate under Section 24B of the Income Tax Act, according to Atul Goel, president (elect) of NAREDCO, Pune, as reported by Mint.

“It is an opportune moment to award industry status to the real estate sector so that it can avail cheaper credit facilities from financial institutions,” Goel said.

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CREDAI, the real estate developers’ association, has proposed a tax exemption for investments in Real Estate Investment Trusts (REITs) in a letter to the finance ministry. REITs are companies that combine the capital of several investors to own, operate or finance income-producing real estate. 

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CREDAI has recommended a tax exemption for REIT investments starting at Rs 50,000. It has also requested that the government enable tax-neutral corporate consolidation through mergers for delayed housing projects.

According to the Mint report, realtors also anticipate that the government would grant GST exemption for under-construction properties as well as incentives for private investment in the housing sector.

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Homebuyers will benefit from an extension of the Credit-Linked Subsidy Scheme under the Pradhan Mantri Awas Yojana for middle-income groups till December 31, 2022, according to real estate developers.

To stimulate the property market in non-metro cities, the government may consider raising the house value limit to Rs 75 lakh. Developers have proposed raising the cap in metro cities to Rs 1.5 crore from the present maximum of Rs 45 lakh.

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Alternatively, the government can expand the size of such affordable housing apartments to 90 sqm in metros from 60 sqm and 120 sqm in non-metros from 90 sqm.

According to real estate developers, the industry has the ability to play a major role in the country’s economic recovery and job creation, and they hope that their suggestions will be included in this budget.