Budget 2018: Opportunity to fulfil housing expectations of millions

Representational pictureThe Housing for All by 2022 mission has set the stage for a robust recovery in the residential property market In the past two years we have seen an unprecedented focus on reforms channelised through the Benami Transactions Prohibition Amendment Act 2016 demonetisation Real Estate Regulatory Act RERA and the Goods and Services Tax GST regime So this time the Budget for FY201819 will be much more critical than ever The provisions if moved in positive directions will have the power to continue the momentum and cement home buyers confidenceWhile so many tough decisions have already been taken it will be worthwhile to rationalise further the direct tax structures impacting home buyers I believe that there is room for improvement in some of the prime income tax IT provisions meant to incentivise the home buyersDeduction on home loan interest The IT Act has provisions under which a home buyer can claim a deduction on home loan interest paid towards an underconstruction property in five equal instalments for five financial years But this deduction is included in the overall deduction amount of Rs 2 lakh that one can claim in a financial yearAlso the condition of equal deduction during five years leaves limited room for home buyers to claim benefit of the current years interest paid Buyers can claim the benefit only after receiving possession of the property and thus there is no benefit during the construction period Given so many properties are delayed in possession the interest component paid during construction can also become very highSample this A home buyer pays Rs 75 lakh over five years of construction period as interest towards home loan In this case he can claim Rs 15 lakh every year but then this amount is included in the overall limit of Rs 2 lakh thus making no significant impact on his taxable incomeTo provide relief to home buyers as well as encourage investment in underconstruction properties the government should introduce a separate tax benefit for preEMI interest during the construction periodDeduction on interest paid after completion for letout properties As budget 2017 has imposed a limit of Rs 2 Lakh on deduction of interest paid for nonselfoccupied properties under Section 71 of Income Tax Act investment in properties for rental have become less attractive Rental housing is an important part of the housing industry as it provides a roof to people who cannot afford their own houses To make rental housing more attractive the government should increase the limit to Rs 3 lakhSection 80EE Under Section 80EE of the IT Act firsttime home buyers are entitled to claim deductions of up to Rs 50000 a year towards payment for home loan interest in addition to the limit of Rs 2 lakh defined under Section 80C of the Act although there are conditions attached to it Firstly the home loan should be taken in the period between April 1 2016 and March 31 2017 Secondly the value of the property should be below Rs 50 lakhThere is a need to review these two conditions The threshold of property value as Rs 50 lakh deprives many home buyers in metro and Tier 1 cities to take benefit of this deduction Even the Reserve Bank of India RBI defines properties under Rs 65 lakh as affordable properties in metros and Tier 1 cities Therefore this threshold should be raised to Rs 65 lakhSection 54 amp 54F Under these sections a home buyer can claim an exemption for longterm capital gains if heshe invests the sale proceeds of one property to buy another within three years However the person can lose this benefit if the property is not completed within three yearsThis condition penalises a home buyer for a reason which is out of his control Residential projects take anywhere from 37 years and given the present scenario the period of three years is not realistic This period should be raised to five yearsThe forthcoming Budget presents an opportunity to further build momentum to fulfil the core need of housing for millions and given the kind of focus and push by the government the Finance Ministry should leave no stone unturned in contributing towards the cause of Housing for All by 2022Catch up on all the latest Mumbai news current affairs from Mumbai local news crime news and breaking headlines hereCatch up on all the latest Mumbai National and International news hereDownload the new midday Android and iOS apps to get updates on all the latest and trending stories on the goThe contentreporting displayed on our website wwwmiddaycom is provided ASIS AS AVAILABLE by us from third party agencies sources without any verification from our side It may contain error bugs and other limitations The readers can rely on the content at their own will Midday accepts no responsibility or liability for its dependability trustworthiness reliability data text images video messages or any other material whatsoever or for any claimslossaction that the reader may suffer as a result of relying on the content on our site Midday managementmiddaycom reserves the sole right to alter delete or remove without notice the content in its absolute discretion for any reason whatsoever