Real estate sector expectations from the Union Budget!
Many different segments of the real estate sector are expecting significant reforms from the government. Experts and industry leaders have suggested several measures to improve the condition of the real estate industry.
1. Increase in tax deduction on home loan repayment- Nowadays, you get two types of tax deductions on home loan repayment. One is on the principal amount of the home loan under Section 80C, and second, deduction of up to Rs 2 lakh for the interest paid on the loan is available under Section 24(b). However, there are many other investment options under Section 80C like small savings schemes, insurance policies and pension schemes, due to which many people are not able to take tax deduction on the entire principal amount of their home loan. Similarly, the limit of Rs 2 lakh under Section 24(b) is also inadequate at times, especially when the initial loan installments are high.
Therefore, the real estate sector is demanding that a separate section be created for tax deduction on home loans, in which deduction of up to Rs 5 lakh can be given on both principal and interest. This will provide relief to those who are repaying home loans and this step can also prove beneficial for home buyers. In such a situation, this change can have a positive impact on the real estate sector and can boost demand.
2. Set-off of house property loss - Nowadays, if you have a house property and you suffer a loss from it, then you can set it off from your other income (such as salary or business), that is, you can deduct the loss from your income so that the tax can be reduced. But now this set-off can be done only up to Rs 2 lakh. Earlier this limit was higher, but in 2017 it was limited to Rs 2 lakh. Its purpose was that people should not make much deduction on the interest received on other property.
The problem is that this rule is not only applicable to individual houses, but also to commercial properties (which are used for business). There are often big losses in the real estate sector, especially when new properties are being built or rented out. In this situation, the real estate industry is demanding that this limit of Rs 2 lakh be removed completely, or at least it should not be applied to commercial properties. This change can provide great relief to developers and the real estate sector.
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