NAREDCO, the National Real Estate Development Council, has recently advocated for the grant of infrastructure status to the housing segment, believing that such a designation would facilitate tax benefits effectively.
NAREDCO advocates for industry status for housing.
The National Real Estate Development Council made its case for infrastructure status specifically aimed at the housing sector. The Housing Ministry has indicated that it is possible to extend infrastructure status to the affordable housing segment.
The Housing and Poverty Alleviation Ministry (MHUPA) noted that their current focus is on enhancing the affordable housing segment. The Housing Ministry revealed optimistic plans to initiate changes in this area.
NAREDCO, however, has called for the extension of infrastructure status to encompass the entire real estate sector. The developers' national council remains hopeful that such inclusion will lead to significant tax advantages if the housing segment as a whole can gain this status. In contrast, the Housing Ministry pointed out that they see the necessity of offering infrastructure status only to the affordable housing sector.
Will the housing segment gain industry status?
In addition, NAREDCO has put forward suggestions aimed at enhancing the appeal of rental housing. The council asserts that making rental housing more attractive could effectively address the ongoing housing shortage.
The national council has proposed amendments to the Income Tax Act. They suggest raising the current deduction rate from rental income from 30% to 50%. Moreover, they have advocated that the deduction rate for women and senior citizens should be set at 100%. Their rationale is that these changes would empower women and improve housing accessibility.
Developers are pointing out that the Reserve Bank of India’s stringent monetary policies are dampening the demand for housing units. A report by Cushman and Wakefield indicated that the new project launches have decreased by 16% over the previous year, based on research conducted across eight major Indian cities, including Ahmedabad, Bangalore, Chennai, Delhi, Hyderabad, Kolkata, Mumbai, and Pune.
Tata Housing Ltd.'s Managing Director and CEO, Mr. Brotin Banerjee, expressed the belief that eliminating the service tax pertaining to the housing sector could stimulate demand. He commented that an increase in the income tax exemption limit to three lakh rupees is anticipated, alongside a reduction in excise duty.
Mr. Banerjee concluded by stating that removing the service tax on residential construction would lead to a revival in demand, encouraging greater consumer engagement in purchasing activities.