Saturday, June 6, 2009 / Chennai

CREDAI (Confederation of Real Estate Developer's Associations of India) presents wishlist

While real estate development activity was not a cause for the economic slowdown in India, it can certainly be a part of the solution for the revival of our economy now, says CREDAI.

An apex body of realty sector has sought incentives to promote affordable housing projects and infrastructure status for the sector.

The representatives of confederation of Real Estate Developers Associations of India (CREDIA) met CBDT Chairman SSN Moorthy and submitted a prebudget memorandum to the Finance Ministry.

Pointing out that sales have fallen to 25-30 percent of the previous peaks, the industry body said revival and stimulus strategies are urgently needed for the real estate sector.

“While real estate development activity was not a cause for the economic slowdown in India it can certainly be a part of the solution for the revival of our economy now,” CREDIA said in the memorandum.

The major demands include incentives for affordable housing projects, promotion of rental housing stocks and removal of service tax on rentals of commercial property.

Besides, it demanded an increase in the deduction limit for interest paid and repayment of principal portion on the self-occupied residential property.

To boost affordable mass housing, CREDIA demanded that interest subsidy should be given to homebuyers and builders.

Affordable mass housing projects should be exempt from the payment of direct and indirect taxes.

The association, which has over 4,000 members across all major states, has made several demands to revive the sector, which is reeling under the slowdown in demand and liquidity crunch from last one year.

CREDIA said infrastructure status should be accorded to affordable housing, integrated township and SEZ projects.

The industry body sought fiscal incentives for homebuyers to boost sales. For affordable housing, it said full deduction should be given on interest paid on self-occupied residential houses. On other projects, deductions up to Rs.3 lakh per annum should be allowed and upto Rs.5 lakh for tier-I cities.

On the repayment of principal portion of housing loan, it demanded that in addition to the present deduction up to Rs.2 lakh deduction may be permitted.

As per the Deepak Parekh task force, affordable housing has been defined in two categories:

• Affordable housing with a carpet area of between 300 and 600 sq.ft.
• Affordable housing with carpet area not exceeding 1,200 sq.ft.

CREDIA also demanded removal of service tax on rentals of commercial ad retail properties. Removal of service tax on rentals of commercial and retail property is a great need of the hour not only because of the global economic meltdown but also support for revival of retail industry, it said.

The association also demanded 100 percent interest deduction on home loan taken by the senior citizen.

To promote rental housing stock, it suggested that the rental income arising from the renting of residential unit located in an affordable mass housing project should be totally exempt from payment of income tax.