CREDAI Bengaluru writes to Hon’ble Finance Minister ahead of Union Budget requesting amendments in direct, indirect taxes w.r.t real estate sector

Bengaluru, January 20, 2023: The Bengaluru Chapter of the real estate body for builders CREDAI Bengaluru has written to the Union Finance Minister of India Ms. Nirmala Sitaraman requesting to make amendments in aspects of Direct Taxes and  Indirect   Taxes related to the real estate sector to enable seamless business operation.

“These measures will enable us to strengthen our participation in the economic growth of our country and the state and contribute meaningfully to the growth of  Karnataka and our entire country.  We  at CREDAl –  Karnataka,  wish  to  participate  in  enabling  the  Honourable  Prime  Minister’s vision to make India into a US$ 5 Trillion economy, ” avers Mr. Bhaskar T Nagendrappa, President, CREDAI Bengaluru

“Real Estate development is one of the largest contributors to the economy on a pan- India basis and employs millions of people in both the organized and unorganized sectors. The sector creates huge employment opportunities for the skilled and unskilled workforce across the country.  The vitality of the real estate development sector is a high priority, therefore,” added Mr. Bhaskar.T Nagendrappa.

CREDAI has requested the following amendments in direct  & indirect taxes related to the real estate sector:

DIRECT TAXES:

The present section, provisions, issues, suggestions for amendment, and rationale for amendment  wrt Direct Taxes  on  the below-mentioned points :

1.  Affordable Housing: Amendments in Section 80IBA
2.  Interest as deduction for Home Buyers: Increase in limit
3.  New Provision for Promoting Rental Housing
4.  Long-Term Capital Gains from Real Estate
5.  Sec 23(5) Tax paid on notional rent of property held in inventory
6.  Removal of section 43 CA for primary sale transactions
7. Deduction of Loss under House Property
8. Changes in Section 24 (B) for increasing interest deduction for Home Buyers
9. Relaxation in provisions related to REITs
10. Amendment to  Section  80C  to increase the limit for repayment of housing loan principal or alternatively introducing another section for  Deduction with respect to Principal repayment.
11. Amendment in Sec 72A for encouraging  Mergers and Acquisition provisions to Rescue Stalled Projects
12. Provisions relating to Joint Development  Agreements
13. Funding from Foreign Investors
14. Tax Holiday for SEZ Units and Developers
15. Measures to Promote Foreign Investment

INDIRECT TAXES:

The   suggestions   for   amendments   wrt   Indirect   Taxes   were on   the below-mentioned points:

1. Options of Tax Rate for Construction Services
2. Payment of Tax by Land Owner for Construction Services provided by Developer – Directly to the Appropriate Government
3. Clarification  on  Mortgaged  Flats  –  Payment  of  Tax  by  Developer  under  Reverse Charge Mechanism
4. Clarification  on Applicability  of Entry 41A of Notification  No 12/2017 — CT (R) for plot projects
5. Clarification on Obligation of Payment of Tax on TDRs for Commercial Projects
6. Clarification on Applicability of Tax on Normal TDRs (Land TDRs)

“We are hopeful that the Hon’ble Finance Minister will carry out these amendments since this will give a huge boost to the real estate sector”, felt Mr. Bhaskar T Nagendrappa.