Significant transformation and radical changes within the real estate sector is necessary to achieve a fivefold increase in India’s Economy, an industry leader has said, calling on the government to remove capital gains tax on real estate and to tax free the residential rent.
According to Samir Jasuja, Founder and CEO of PropEquity, in order to achieve a $1 trillion real estate economy, a series of radical reforms have to be taken in order to achieve the desired target which are mentioned below:
Removal of Capital Gain tax on real estate
Removing capital gains tax on real estate would eliminate the tax paid on profits from selling property. This could boost real estate transactions, increase liquidity, and potentially lower housing costs.
Residential rent earned from the property to be tax free or adjusted into EMI
Residential rental income is currently subject to taxation as income from house property. It would be beneficial for homeowners if rental income could be directly offset against home loan EMIs. This policy change would alleviate the double taxation burden on property owners, who currently pay taxes on both rental income and home loan interest. Such a measure is anticipated to stimulate real estate transactions.
Reduced GST Rates for Real Estate
Reducing GST rates on real estate could potentially decrease overall housing costs by lowering the tax burden on property purchases.
Increased Interest Deduction Limit
Increasing the interest deduction limit under Section 24B of the Income Tax Act would allow homeowners to claim a higher amount of interest paid on their home loans as a tax deduction, potentially providing significant tax relief.
Single Window Clearance system
Single-window clearance system aims to consolidate all development authorities under one roof, ensuring timely approvals for real estate projects.
CASE STUDY
Dubai being half the size of South Mumbai is 60% of Indian Real Estate
Dubai, the capital of Emirates of Dubai covers a span of 35 km2. The2023 real estate stats of Dubai are very intriguing & hence substantiates the above listed amendments expectation for the real estate industry in the union budget of India.
Dubai registered whooping sales of $155 Billion in the real estate sector i.e. INR 12,86,880 Crores, being an area of merely 35 km2 i.e. half the size of South Mumbai (~70 km2) is a remarkable performance by the real estate sector of Dubai.
The prime catalyst for such kind of induced growth are the real estate laws in Dubai:
- No Capital Gain Tax
- No Tax on Property Rental income
- No Tax on Property Purchases
Eliminating the tax paid on profits from selling property as well as on rental income resulting in boost of real estate transactions, increased liquidity and increase in volume of transactions which results in higher collection of stamp duty charges.
EMAAR Dubai vs TOP 10 Developers of India
The top 10 developers of India mentioned below with their respective sales values in Crores which totals to approximately 99,400 Cr. whereas Emaar Properties individually recorded sales value of 1,00,000 Cr. in Dubai for 2023.
EMAAR Dubai Sales: $11 Bn: ~INR 1,00,000 Cr.
Top 10 Developers of India for 2023: INR 99,378 Cr.