Budget 2024 Expectations: Housing Reforms & Senior Living Support


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    Pyush Lohia, Director, Lohia Worldspace

    “We are hopeful that the upcoming budget will bring significant changes. We are particularly looking for increased investment in infrastructure and meaningful tax reforms. Easing GST on housing would be a significant step, making homes more affordable and driving demand. These measures are crucial not just for our sector but for broader economic growth, job creation, and supporting small businesses. A balanced approach will pave the way for sustainable development.”

    Mr. G Hari Babu, National President of NAREDCO

    It is crucial that the government continues to prioritize affordable and sustainable housing initiatives. Policies supporting affordable housing will help bridge the housing gap and ensure decent living conditions for all citizens. Meanwhile, promoting sustainable housing practices aligns with global trends and addresses environmental concerns, positioning India as a leader in green development.

    Correspondingly, the finance ministry should come up with the 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 FY 2024-2025, along other budgetary support and relaxations including allowing input tax credit under GST and incentives for rental housing in order to achieve the housing for all target.

    Denial of ITC for all new projects has disrupted the supply chain, since entire GST on procurements is borne by developers leading to increase in cost of construction, thus impacting the cash outflow adversely. The ultimate brunt of the increased cost of construction falls on the end customer.

    The average rate of carpet area per sq ft Rs. 7000 in metro cities is much higher than that provided for in GST law for ‘affordable residential apartments’, due to which the benefit of affordable housing is not available to most projects in metro cities.

    Since the sale of land is exempt and the construction of an area is like a works contract, suitable amendments are to be carried out to set out the exemption and such treatment. Accordingly, since the sale of land is not subject to GST, taxing grant of development rights or long term lease rights which are in the nature of benefits arising out of land in the manner provided under the Notifications based on the market value of flats / commercial offices, is not appropriate given the nature of the transaction. Any development agreement granting development rights is no different from any transaction of sale of land for consideration in the form of the construction of an area. The same is the case with the transfer of TDR. It may be noted that in several Supreme court judgements benefits arising from land is held to be “land”.

    Under the service tax law, a transfer of title in immovable property was outside the purview of the definition of ‘service’, while under GST law only the ‘sale of land and building’ is treated neither as a supply of goods nor a supply of services. Since GST has subsumed service tax law, it would be most appropriate to treat similarly under GST law and exempt transfer of development rights, TDR, leasehold rights.

    Municipal charges paid to the local authority to be outside the purview of GST

    “Any Activity in connection to function entrusted to Municipality under article 243W of the Constitution” is exempt from GST. (Ref. Notification 12 of 2017 – Clause 4 CT (Rate))

    Accordingly, Activities mentioned in Schedule 12 to Constitution such as “Planning of Land-Use and Construction of Buildings and Urban Planning including Town Planning, Fire Services, Debris & Waste Management, etc.” are outside purview of GST.

    LUC and Labour cess are taxes and admittedly there can not be tax on tax.

    Attention is also drawn to Notification 16 of 2018 read with Notification 14 of 2017 according to which activities or transactions undertaken by Municipality pursuant to functions entrusted to Municipality under Article 243W of the constitution are neither Goods not Services and hence the same can not be the basis of levy of GST.

    Therefore, GST is not applicable for Municipal Charges such as development charges, scrutiny fees. FSI on premiums, premium for staircase, lift, parking, labour cess, etc.

    Limit on interest deduction paid on home loan

    Presently 2 Lakhs Deduction on account of interest payment available under section 24 should be made applicable on full interest paid Also, five years period for acquisition / completion from the year of borrowing should be dispensed with.

    Under Sec. 24(b), deduction on account of interest payment on housing loans is permissible to owners of rented dwelling units to the fullest extent. In case of owner occupied houses the limit is set at Rs. 2 lakh.

    Also, the deduction is available only if acquisition or construction is completed within five years from the end of the financial year in which capital was borrowed.

    The current limit of interest deduction under Section 24 of IT Act 1961 on housing loan of INR 2.0 lac should be removed to incentivise home buyers with the aim of spurring overall demand.

    Mr. Anantharam Varayur Co-founder of Manasum Senior Living Homes

    India’s senior living industry is set for significant growth due to a rapidly aging population. The proportion of elderly individuals aged 60 and above is expected to increase from 8.6% in 2011 to 19.5% by 2050, with their spending power projected to rise from $100 billion in 2020 to $1 trillion by 2030. Currently, India has 150 million elderly people, expected to reach 230 million in the next 10-12 years.

    Despite this, India has only 18,000 senior living units, a penetration rate of just 1%, compared to the UK (11%), Australia (6.7%), and the USA (6%). Demand is projected to grow from 1 million units in 2024 to 2.5 million in the next decade.

    To meet this demand, reducing the 18% GST on senior care services and offering tax breaks for developers is crucial. Subsidies or tax deductions for low- and middle-income seniors can improve affordability. Additionally, promoting development in Tier-II and Tier-III cities will ensure wider access. Addressing these needs can help create a robust senior living ecosystem in India.

    These citizens have paid tax throughout their life. Now, when their incomes have stopped, expecting them to pay a heavy tax of 18% on various services is really sad. Apart from this, they are still paying taxes on various products consumed by them like medicines, diapers, and so on. At least for the services and their real estate purchases, there has to be relaxation.

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