The Confederation of Real Estate Developers’ Associations of India (CREDAI), the apex body for realtors, has called for a 100 percent deduction on interest paid on home loans under the Income Tax Act to boost demand for affordable and mid-income housing.
CREDAI also proposed that the definition of affordable housing be revised, with the price cap increased from Rs 45 lakh to at least Rs 75-80 lakh.
In a press conference on November 25, CREDAI President Boman Irani suggested that the government should apply a 1 percent GST rate on under-construction homes priced up to Rs 75-80 lakh to stimulate demand in the affordable and mid-income housing sector.
Currently, under-construction affordable homes priced up to Rs 45 lakh attract a 1 percent GST rate, while homes above this threshold are taxed at 5 percent, with developers unable to claim input tax credit.
Irani explained that the affordable housing definition, introduced in 2017, set the Rs 45 lakh cap. Given inflation since then, he argued the cap should be raised to Rs 75-80 lakh. He added that prospective homebuyers would benefit from lower GST if the definition of affordable housing were updated.
The CREDAI President also suggested that the government consider removing the price cap altogether and base the definition solely on the carpet area, maintaining the current limits of 60 square meters in metropolitan areas and 90 square meters in non-metropolitan areas.
Irani emphasised the importance of reducing taxes to put more money in people’s hands. CREDAI’s President-Elect, Shekhar Patel, called for a 100 percent deduction on home loan interest payments, replacing the current Rs 2 lakh exemption limit. Irani agreed, stating that such a move would significantly boost demand for housing.
Under Section 24 of the Income Tax Act, the deduction on interest for loans on self-occupied property is currently limited to Rs 2 lakh.
CREDAI Chairman Manoj Gaur also highlighted the lengthy approval process, with builders spending 12-18 months obtaining various government permits to develop real estate projects. He stressed the need to improve the ease of doing business in the sector.
Founded in 1999, CREDAI represents over 13,000 real estate developers nationwide.