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NAREDCO Demands Higher Home Loan Tax Breaks & Settlement Commission Revival

The National Real Estate Development Council has submitted key recommendations to the Finance Ministry to boost the housing sector. It proposes raising the tax deduction limit on home loan interest from Rs 2 lakh to Rs 5 lakh for owner-occupied properties. The body also advocates for the reinstatement of the Income Tax Settlement Commission to resolve disputes and improve investor confidence. Additional measures include tax rate rationalization and easier norms for rental housing projects to support the "Housing For All" mission.

Key Points: NAREDCO Seeks Rs 5 Lakh Home Loan Tax Deduction, IT Commission Return

  • Raise home loan interest deduction to Rs 5 lakh
  • Remove 5-year project deadline for deductions
  • Restore Income Tax Settlement Commission
  • Lower tax rates for non-corporate entities
  • Simplify rules for rental housing projects
2 min read

NAREDCO urges government to increase home loan tax benefits and restore settlement commission

Real estate body NAREDCO urges govt to raise home loan interest deduction limit to Rs 5 lakh, remove completion deadlines, and restore Income Tax Settlement Commission.

"Rationalising taxation, especially on housing finance, will directly stimulate end-user demand - Parveen Jain, NAREDCO President"

New Delhi, January 22

The National Real Estate Development Council has submitted a comprehensive set of recommendations to the Union Ministry of Finance aimed at revitalising the real estate sector and boosting homebuyer demand. A primary focus of the proposal is the significant enhancement of tax benefits for individuals. The apex body has called for the current Rs 2 lakh limit for interest deduction on home loans for owner-occupied houses to be raised to Rs 5 lakh or more. Additionally, NAREDCO suggested that interest deductions should be applicable from the year capital is borrowed and should cover the full extent of interest paid for at least one property.

To further ease the burden on homebuyers, the council recommended removing the current five-year deadline for project completion or acquisition required to claim interest deductions.

Parveen Jain, President of NAREDCO, emphasised the broader economic impact of these changes, stating, "Rationalising taxation, especially on housing finance, will directly stimulate end-user demand, provide much-needed impetus to a sector grappling with a significant housing shortage, and offer relief to homebuyers impacted by project delays arising from cash flow constraints, while restoring overall buyer confidence".

Beyond housing finance, NAREDCO is advocating for the reinstatement of the Income Tax Settlement Commission, which was discontinued in 2021. The council believes this move is essential for resolving disputes and fostering a transparent environment for investors. Dr. Niranjan Hiranandani, Chairman of NAREDCO, noted that "restoring and strengthening dispute resolution mechanisms like the Income-tax Settlement Commission is critical for fostering a transparent, investor-friendly environment in the real estate sector". He added that such reforms are vital for India's goal of becoming a developed economy by 2047.

The recommendations also include broader fiscal measures, such as reducing the tax rate for non-corporate entities to 25 per cent and capping individual tax rates at 30 per cent, including surcharges and cess. To support the "Housing For All" vision, the body suggested removing the mandatory central government notification requirement for rental housing projects to qualify for deductions under the IT Act, which would better incentivise developers in that space.

- ANI

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Reader Comments

P
Priya S
Good recommendations, but will the government listen? The real issue is project delays. Removing the 5-year deadline for claiming interest is crucial. So many of us are paying EMIs for years on flats that are nowhere near completion. This would provide some financial breathing room.
R
Rohit P
While tax benefits are welcome, this feels like a demand-side fix. What about controlling the skyrocketing prices themselves? Builders need incentives to build affordable housing, not just luxury towers. The 'Housing for All' vision needs supply-side action too.
M
Michael C
As an NRI looking to invest, restoring the Settlement Commission is a smart move. A clear, fast dispute resolution mechanism is key for investor confidence. The sector needs transparency to attract long-term capital, which will ultimately benefit homebuyers with more completed projects.
S
Shreya B
Finally, someone is talking sense! The interest deduction should start from the year we take the loan, not possession. We pay interest for years during construction. This change alone would save lakhs. Hope the Finance Minister includes this in the next budget. 🙏
K
Karthik V
I appreciate the recommendations, but let's be realistic. These are big asks from a builders' body. The government also needs to ensure any tax benefits are passed on to genuine homebuyers and don't just inflate prices further. Strong oversight is needed alongside these incentives.

We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.

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