Union Budget 2024-2025: Realtors body National Real Estate Development Council (NAREDCO) has sought Rs 50,000 crore more fund under SWAMIH in its pre-budget recommendations, to complete stalled housing projects across the country. Stating that this will benefit consumers as well as the industry, NAREDCO has suggested to the Finance Ministry to come up with a second tranche of the Special Window for Affordable and Mid-Income Housing (SWAMIH) fund with Rs 50,000 corpus in the upcoming Union budget for 2024-2025 fiscal year.
In 2019, the Centre had created SWAMIH fund to complete stalled projects. The size of the fund is Rs 15,530 crore and is being managed by SBICAP Ventures, a wholly-owned subsidiary of the State Bank of India.
The government recently informed Parliament that as of November 16, 2023, 342 proposals aggregating to Rs 37,554 crore have been approved under SWAMIH. This will benefit around 2,18,699 homebuyers and unlock projects worth Rs 94,367 crore.
NAREDCO has demanded other budgetary support and relaxations including allowing input tax credit (ITC) under GST and incentives for rental housing in order to achieve the housing-for-all target.
In a letter to Union Finance Minister Nirmala Sitharaman, NAREDCO appreciated the Centre’s timely interventions and initiatives to bolster the real estate segment and foster positive customer sentiments.
NAREDCO said the SWAMIH fund has played a critical role in completing many stuck projects, leading to renewed interest among investors, both foreign and domestic, in the Indian real estate sector.
It requested the government to create a second tranche of the SWAMIH fund with a corpus of Rs 50,000 crore.
“As the ultimate beneficiaries of the fund are the home buyers who have been able to take delivery of their long-stuck dream homes, extension of the lending scheme would be a win-win scenario for both the industry and buyers,” the association said.
The industry body has made a request to allowing the option of claiming input tax credit by residential project developers with higher GST.
After the introduction of realty law RERA, NAREDCO said the accounting has improved with regard to ascertaining the project cost.
ITC would also help in enhancing compliance as it would encourage developers to reduce unorganized sector purchase from unregistered persons, it argued.
Elucidating the tax burden due to the concept of notional income from housing property held as stock-in-trade after two years, NAREDCO President G Hari Babu suggested the amendment of Section 23(5) to either abolish ‘notional income’ or increase the timeline by five years for considering the notional income.
Under Section 23(5) in case of unsold property, held as stock-in-trade and not let out, the annual value of the property after a period of two years post the financial year in which completion certificate was received, will be assessable as income from the property on the basis of its notional rent, the association said.
“Due to three waves of COVID and subsequent lockdowns since two years and consequential impact on the economy, many tenants who were occupying offices and shops have either closed down or negotiated rentals and have paid zero or minimum rentals.
To incentivise rental housing, it suggested that the tax burden on notional rental income should be exempted.
NAREDCO has also suggested several other taxation related amendments including removal of the Rs 2 lakh limit of interest deduction under Section 24 of IT Act 1961 on housing loans in order to boost housing demand.
In a bid to help real estate projects get better liquidity, the industry body has recommended giving MSME status to projects with the required parameters and also allowing priority sector lending for real estate projects.
(With Agency Inputs)