Union Budget 2024: Reintroduce tax holiday for affordable housing with a tweak

Budget 2024 expectations: Union Budget 2024, to be presented by Finance Minister Nirmala Sitharaman on July 23, should look to provide impetus to the real estate and housing sector, says Gaurav Karnik, Partner and Real Estate National Leader, EY India.

“Given the significant forward and backward linkages that the real estate sector has with the economy, growth of the sector is extremely important from an overall growth of the economy perspective,” Gaurav Karnik tells TOI.

The EY expert’s key expectations from the Budget are that there should be a further impetus to the residential segment.

“This can be done through reintroduction of tax holiday for affordable housing with a tweak that the eligibility for affordable housing should be based on size of flat rather than value, revival of the credit linked subsidy scheme which had expired in 2022 which shall enable EWS, LIG and MIG sections of society purchase houses or undertake modifications, need for increasing the interest tax deduction from Rs 2 lakh to at least 5 lakhs and last but least tax incentive for rental housing which would enable meet the government's objective of Housing for All,” Karnik says.

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“In order to bring liquidity and diversified investors such as Exchange Traded Funds in the REIT market, it is imperative that the period of holding for long term capital gains tax treatment for REIT units be brought on par with listed equity shares,” he adds.

Meanwhile, last month, the Union Cabinet, led by PM Narendra Modi, approved 3 crore additional rural and urban houses under Pradhan Mantri Awas Yojana (PMAY). Since 2015-16, the Pradhan Mantri Awas Yojana has been providing assistance to eligible rural and urban households for constructing houses with basic amenities.

All houses that are built under the PMAY are equipped with basic amenities like household toilets, LPG connections, electricity connections, and functional household tap connections through the integration of other central and state government schemes.

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