To boost the financial strength of home buyers, Knight Frank India, a leading property consultancy firm, has recommended the exemption of a separate deduction of Rs 150,000 per year in taxable income on repayment of the principal amount of the loan. mortgage.
Knight Frank also recommended raising the interest deduction limit on home loans to Rs 5 lakh per year and extending the last registration date for the tax holiday scheme on affordable housing projects.
A separate annual deduction of Rs 150,000 for home loan principal repayment will improve housing affordability, said Shishir Baijal, Chairman and Managing Director of Knight Frank India, in a recommendation to the property sector in the Union Budget 2023 -24. the much-needed incentive to opt for home loans.
Investing in housing is the greatest in life
Baijal argues that Article 80C of the Income Tax Law does not provide any benefits or exemptions focused on investment in housing, when for most taxpayers, investment in housing is the largest and most important expense of their lives. He said that investors have many investment options and many investors are reluctant to buy a home due to the lack of benefits, especially on the principal amount of the mortgage loan.
Important contribution of the real estate sector in the GDP
Knight Frank India chief says: “The real estate sector is one of the largest contributors to the country’s gross domestic product (GDP) and the second largest employer. The region is home to more than 200 industries and services, from manufacturing to services. Any boost given to real estate may also encourage all the ancillary industries.
Knight Frank has said that Section 24 of the Income Tax currently allows deduction of up to Rs 2 lakhs on home loan interest which should be increased to Rs 5 lakhs. This will increase affordability for people and encourage home sales.
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Knight Frank has recommended the extension of the deadline for completion of properties under construction to five years, instead of the current three, under Section 54 of the Income Tax Act. Under this section, long-term capital gains arising from the sale of an existing home may be used to purchase or build a new property. If the exemption-eligible investment is made through a property under construction, it can only be claimed if construction of the property is completed within three years of the sale of the previous home.
Baijal said the deadline for registering affordable housing projects to take advantage of the tax break under section 80IBA has expired. It needs to be expanded and reactivated.
The 100 percent tax break for affordable housing projects in Section 80IBA was available for projects approved through March 31, 2022.