National Real Estate Development Council (NAREDCO), the apex body of real estate industry in the country, expects Finance Minister to grant infrastructure status to housing under section 801A of IT Act, 1961, thereby, treating housing at par to other infrastructure projects.
In a release to Track2Realty NAREDCO said 100% Income Tax exemption shall give fillip to development of housing & integrated townships with required physical and social infrastructures such as roads, water supply, sewerage, education, healthcare and recreation. It will accord the much needed momentum to planned housing and township development. It is pertinent to point out that increasing urbanization is aggravating housing shortage and there is a backlog of over 26 million housing units in the country.
Alternatively, NAREDCO expects Finance Minister to provide Income Tax exemption for the construction of smaller houses, up to 1200 sq ft carpet area, u/s 80 IB(10) and extend provision of this clause for projects sanctioned after 31 March 08. The shortage of EWS/LIG/LMIG houses exceeds 90% of the total housing shortfall.
NAREDCO wants Finance Minister to include Affordable Housing projects, falling under the definition of “Affordable Housing in Partnership” under the provisions of section 35 AD. This will give impetus to construction of houses between 300-1200 sq ft carpet area.
With the increasing share of services sector, 52% of GDP at present, rental housing for migrants is becoming a necessity. NAREDCO wants the Finance Minister to give impetus to rental housing to meet the need of migrants, students and young professionals.
For this, NAREDCO wants Finance Minister to introduce a new section 10(44) of IT Act, exempting rental income from Income tax for five consecutive years for houses with carpet area 300-1200 sq ft. This would help in promoting rental housing built after 01 April 2011. For others, change income tax at a flat rate of 10 percent of rental income u/s24. Alternatively, increase the exemption limit u/s24 from 30% to 50% in general and 100 % for senior citizen, women and handicapped. As also, reduce TDS rates to 7.5% and 10% from 15% and 20% applicable now. Also NAREDCO is asking for exemption of long term capital gain tax from house property u/s 54 if the entire capital is invested in purchase/construction of new house(s) one or more.
