SWAMIH Fund Allocations and Budgetary Recommendations
New Delhi, December 17, 2024: The National Real Estate Development Council (NAREDCO) has proposed a significant allocation of Rs 50,000 crores for the second tranche of the Special Window for Affordable and Mid-Income Housing (SWAMIH) fund in the upcoming union budget for FY 2024-2025. Additionally, NAREDCO has advocated for comprehensive budgetary support, including measures like enabling input tax credit under GST and offering incentives for rental housing. These proposals aim to expedite the achievement of the ‘housing for all’ target.
Acknowledgment of Interventions and Initiatives
In a letter addressed to the Honourable Union Finance Minister, Smt. Nirmala Sitharaman, NAREDCO, the apex real estate body operating under the aegis of the union housing and urban affairs ministry, acknowledged the timely interventions and initiatives undertaken by the Centre. These measures have significantly strengthened the real estate segment, leading to a notable upsurge in positive customer sentiments.
Advocacy for SWAMIH Fund and Extension of Lending Scheme
Highlighting the pivotal role played by the SWAMIH fund in unlocking liquidity and reigniting the interest of both domestic and foreign investors in the Indian real estate sector, NAREDCO fervently urged the government to establish a second tranche of the SWAMIH fund with a substantial corpus of Rs 50,000 crores. Emphasizing that home buyers are the ultimate beneficiaries, NAREDCO advocates extending the lending scheme, positing it as a mutually beneficial scenario for both the industry and buyers.
Taxation Reforms and Rental Housing Incentives
Continuing its longstanding plea, NAREDCO urges the provision of input tax credit for residential project developers, particularly those incurring higher GST. This measure, combined with the introduction of RERA, is anticipated to enhance compliance, improve accounting practices, and potentially discourage unorganized sector purchases from unregistered entities.
Suggestions for Tax Relief and Amendments
G Hari Babu, President of NAREDCO, highlighted the tax burden imposed by notional income from housing properties held as stock in trade after a two-year period. He suggested abolishing ‘notional income’ or extending the timeline by five years under Section 23(5) to consider such notional income.
Incentivizing Rental Housing and Proposals for Liquidity
With the pandemic’s multiple waves impacting tenants in offices and shops, leading to closures or minimal rentals, NAREDCO recommends exempting the tax burden on notional rental income to incentivize rental housing. Additionally, suggestions encompass taxation-related amendments, such as removing the Rs 2 lakh limit on interest deduction for housing loans under Section 24 of the IT Act, 1961, to stimulate housing demand.
Facilitating Real Estate Projects and Acknowledging Government Initiatives
To bolster real estate projects, NAREDCO proposes granting MSME status to projects meeting specified parameters. Furthermore, they advocate for allowing priority sector lending for real estate projects. Acknowledging the Government’s consistent prioritization of housing for all through the flagship Pradhan Mantri Awas Yojana, G Hari Babu, President of NAREDCO, praised the initiative. He emphasized its success in facilitating housing for millions of citizens, recognizing homeownership as a crucial source of financial stability, security, and a catalyst for building stronger communities.