Amplification in the supply of affordable homes and the requirement to meet the objective of 'Housing for All' has landed the developers of these projects in a tax holiday on profit situation. Under section 24B of the Income Tax Act, deductions have been permitted to the consumers up to Rs. 2lakh interest payments on loans for houses for properties occupied by self.
Nirmala Sitharam, Finance Minister, in her July budget quoted permission for further deductions on the interest charged on the loans in and under the bracket of Rs. 45 Lakh that date up to March 31, 2020. In her announcement later she also talked about the financial package to improve the present situation of the market to amplify the demand and make credit available more freely. The government also is moving ahead with the direct link of home loan and repo rates to make sure that RBI rate cuts are at a better transmission.
The Indian real estate sector valued at $120 billion today has witnessed its worst slowdown in a decade. A study has revealed that home inventories are lying unsold in major cities of India like the NCR region, Chennai, Bengaluru, Hyderabad, Pune, Ahmedabad, Kolkata, and the total units have taken the number to more than 4 lakhs. The sector is wailing for help seemingly looking for a revival from this state. The changes in the budget scenario have bought in some hope but the consumer front looks on an all-time low, purchases are being delayed, investments are being kept on hold, the fluctuating prices have majorly impacted the decision making the power of the buyer.
For growth in any sector, it is imperative to recognize the significance of economic revival and for the economy to grow the growth rate has to be at least 8% which would eventfully change the mindset of the buyer. Creating jobs has to be on priority for the government to increase the discretionary expenditure. Even after the GST going down to 5% for the houses in the process of construction and 1% for the segment of affordable housing, the cost for materials used for the manufacturing business is still high.
There is a high need for the prices to go down for improving the business and to bring in ease.The demand for the corporate tax to be lowered from the present percentage of 33% to 25% is increasing among the developers to manage the uncertainties of the market.
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