Representative image of real estate.
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The National Real Estate Development Council (NAREDCO) on Friday demanded MSME status for the real estate sector and pitched for budgetary relaxation in tax rates and norms including allowing input tax credit under GST.
In a memorandum to Union Finance Minister Nirmala Sitharaman the industry body has demanded that tax benefits under section 80-IBA should be reintroduced. Section 80-IBA of the Income Tax Act allows deductions in respect of profits and gains from housing projects.
Addressing a press conference NAREDCO national president G Hari Babu said the government’s revenue forego would not be very significant by allowing 80-IBA deductions but it would act as a big stimulus for the industry.
On GST, NAREDCO vice president Gaurav Jain said the developers should be given the option of claiming input tax credit with higher GST slab.
In March 2019, the GST Council cut the tax rates on residential properties from 12 per cent to 5 per cent. For the affordable housing segment, the GST rate was lowered from 8 per cent to 1 per cent. However, under the reduced rates the option of input tax credit is not available.
Jain said MSME status would help the sector in accessing credit at affordable rates, that in turn would benefit buyers.
Presently bankers have taken a negative view on real estate. Many benefits available to other sectors due to MSME status are not made available to the real estate sector.
“Guidelines should be drawn to ensure those compliant will be able to achieve status of MSME and be recognised for priority sector lending and other benefits including stamp duty waivers, concessions on mortgages etc,” the industry body noted in its memorandum submitted to the finance minister ahead of the presentation of the union budget.
To achieve the target of ‘housing for all’, NAREDCO suggested the creation of the second tranche of the Special Window for Affordable and Mid-Income Housing (SWAMIH) fund with a corpus of Rs 50,000 crore in the Union Budget 2024-2025.