Income tax deduction of Rs. 5 lakh on interest repayments and more expectations of the real estate industry from Budget 2022

With the real estate industry witnessing handsome sales growth in 2021 and strong recovery in new launches, industry stakeholders have several expectations from the 2022 Union Budget. They feel that the Government should consider hiking the deductible threshold under Section 80C from Rs. 1.5 lakh currently, in order to boost demand along with focusing on spending on infrastructure and incentives for MSMEs. They also urge for a redefinition of the criteria for affordable housing, stating that the Rs. 45 lakh limit is too low in major Indian cities. A limit of Rs. 85 lakh for Mumbai and Rs. 60-65 lakh for other cities will automatically bring more buyers under the affordable housing ambit, help them enjoy higher tax breaks, subsidies and lower GST, and rapidly boost housing sales figures. 

COO and Founder at Square Yards, Kanika Gupta Shori, feels that hiking the standard deduction of Rs. 2 lakh on home loan interest repayments to Rs. 5 lakh will keep demand strong in the housing sector, helping more salaried buyers purchase their dream homes and enable some recovery for real estate developers who have suffered heavy losses in the past and have razor-thin margins at present. Many experts feel that tax exemptions for ARHC will also help in keeping labor related hurdles at bay while advocating an extension of the extra Rs. 1.5 lakh deduction up to 31st March, 2022. 

Some stakeholders desire higher tax relief for NRIs through lowering their TDS rates on property transactions along with some relief measures for the tax-penalties charged on differences between the property agreement value and circle rate. Differences exceeding 10% leads to high Section 43CA penalties. Extension of this relief till 20% is a must as per many experts.