NAREDCO i.e. the National Real Estate Development Council is backing the rental housing concept in the upcoming union budget for the fiscal year 2019-20. The realty council suggests the Modi-led Central Government to introduce incentives such as 10-year tax holiday to the real estate developers on the profit earned from the business.
Niranjan Hiranandani, President, NAREDCO said that in view of the housing shortage in the country and the objective ‘Housing for All by 2022’ as also in view of the fact that all cannot afford ownership housing, we need to give a big boost to ‘Rental Housing. The council also gave a bucket-list of incentives to promote rental housing in a bigger way.
Apart from the tax holiday to the realtors, the council also recommended deductions on expenses such as interest and brokerage. The customers today prefer fully-furnished flats and thus NAREDCO said that the depreciation should be allowed on furniture and fixtures as well as on apartments.
NAREDCO president also said that high cost of houses and high property taxes lead to a low rate of return (ROR) from rental housing, making renting out an un-remunerative proposition. Continuing further he said that to improve the effective ROR from renting, it is suggested that the deduction from rental income under Section 24(a) be increased from 30 percent to 50 percent. This will promote rental housing.
The exemption of goods and services tax on maintenance charges of residential complexes should also be brought into effect the council said.
The realtors in India have two main associations that include NAREDCO and CREDAI.