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'Increase tax benefits for home buyers to boost realty demand'
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SME Times News Bureau | 25 Jan, 2020
The
Confederation of Indian Industry has urged the government to increase the tax
benefits to home buyers and extend income limit under Pradhan Mantri Awas
Yojana to boost demand in the real estate sector which is battling stress and
liquidity issues for the past year.
"To meet a minimum GDP growth target of 6 to 7 per cent it is very important to
have a definitive plan for boosting the demand in the real estate sector, which
will have significant impact on job creation in both formal and informal
sector, as well as a multiplier effect on overall demand” Chandrajit Banerjee,
Director General of the Confederation of Indian Industry," said.
The announcement of Rs 25000 crore Alternate Investment Fund for providing
last mile liquidity is a very welcome step. "However, the sector needs more
liquidity support and steps to boost demand," he said.
CII has proposed a focused action plan to boost the real estate sector as part
of its pre- budget recommendations.
CII has called for additional tax benefits to home buyers to boost housing
demand. The maximum available deduction on interest payment of home loan taken
for all the property/(ies) should be increased from Rs 2,00,000 to Rs 5,00,000.
Further the quantum of set off of losses from house property
(self-occupied/rented) against other heads of income should be increased from
INR 2,00,000 to INR 5,00,000.
The Government should consider increasing the income criteria under PMAY scheme
to Rs 18 and 25 lakhs from the current Rs 12 and 18 lakhs in the MIG I & ll
categories, respectively. This would allow a wider section of the society to
benefit from the scheme pushing demand.
ln addition to low demand, the sector has been facing liquidity challenges,
post the ILFS crisis. Granting infrastructure status to integrated townships
and overall housing sector, would also help developers access priority funding
at a lower cost.
Currently eligible corporates across sectors are allowed to raise ECBs worth
USD 750mn in a year, and only for construction funding. This limit should be
increased to include the entire real estate sector within its ambit.
The Government should also consider extending the developer incentives to all
SEZs approved by 31 March 2017, instead of to only those notified till 31 March
2017. There are many SEZ projects that were approved at the end of 2016 and in
early 2017 but could not be notified prior to 1st April 2017. There is
typically a lag between approval and notification because of several time-consuming
clearances.
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