Union Budget 2025: These days, the focus of real estate companies has shifted from affordable housing to premium and luxury housing. In such a situation, the dream of owning a house has gone away for people who had hopes of getting a cheap house. Firstly, an expensive house, an expensive home loan and tax burden on it. In such a situation, the expectations of people dreaming of owning a house have increased a lot from the second budget of the third term of the Modi government. Because affordability and getting a cheap house remains the biggest challenge for the country’s large population and potential home buyers. In such a situation, the veterans associated with the real estate sector have submitted a list of their demands regarding the sector to the Finance Minister.
Shishir Baijal, Chairman and Managing Director of Knight Frank India, has requested the Finance Minister to include incentives in the budget for affordable housing, rental housing and making it attractive from tax point of view.
Affordable housing should get a boost
Sales of affordable housing priced below Rs 50 lakh were 48 percent of total housing sales in 2018, which has come down to 30 percent in 2024. Whereas there has been an increase in the sales of houses during this period. There has been a 16 percent decline in sales of affordable housing in 2023 and sales have also decreased in 2024. Home buyers in this segment have been affected by the increase in residential prices and the high cost of living. Shishir Baijal said, beneficiaries of Pradhan Mantri Awas Yojana 2.0 get 4 percent interest rebate on loan of Rs 8 lakh provided the total loan does not exceed Rs 25 lakh and the price of the house does not exceed Rs 35 lakh. But this limit does not matter in metro cities. In such a situation, a demand has been made to the Finance Minister to increase the limit of house value to Rs 50 lakh for metro cities.
Tax rebate on home loan interest up to Rs 5 lakh
In his suggestion, Shishir Baijal has demanded to increase the limit of tax rebate on home loan interest under Section 24(b) of the Income Tax Act to Rs 5 lakh per annum to promote the affordable segment housing market, which is currently Rs. It is Rs 2 lakh.
Separate tax exemption on home loan principal amount under 80C
In his suggestion, he has demanded to give the benefit of separate deduction under 80C on the principal repayment of home loan of Rs 1.50 lakh annually. At present, the exemption of Rs 1.50 lakh available under 80C includes everything from insurance, children’s fees to other tax saving instruments and home loan principal amount.
Tax benefit rules should be made simple
Under Section 54 of the Income Tax Act, long term capital gains arising from sale of an existing house can be used to buy or construct a new property. To avail tax exemption by investing in an under-construction house, the under-construction house must be constructed within three years from the date of sale of the old house, only then long term capital gains can be claimed.
Shishir Baijal said, housing projects take more than three years to complete, which creates problems for home buyers in setting-off of capital gains on under-construction properties. In such a situation, we demand that the time limit for completion of construction properties should be increased to five years instead of the current three. Section 54 states that to avail long term capital gains benefit, the new housing property must be purchased one year before or two years after the sale of the old property. The criteria for buying a new property should also be reduced to two years before the sale of the existing property.
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