Budget 2021: Considering that the credit linked subsidy scheme (CLSS) has ensured a steady increase in the activity level of the housing sector and given the COVID-19 induced disturbances in the economy, the CLSS scheme should be extended by two years up to March 31, 2023. ''Given the relatively higher house prices in major cities, the upfront amount of the CLSS subsidy should be increased to Rs 3.5 lakhs, from the current level of Rs 2.3-2.67 lakhs depending on the income category, with corresponding enhancement in income criteria which shall make the subsidy amount more significant in comparison to the house value,'' said Mr. Shishir Baijal, Chairman and Managing Director, Knight Frank India.
Additionally, on the aspect of housing demand, section 80 C tax deduction on home loan principal repayment does not provide for a focused benefit on housing. A separate annual deduction of Rs 150,000 will provide the much-needed stimulus to opt for house purchase, explained Mr. Shishir Baijal.
The stressed asset fund to revive the stuck residential projects is in progress. Considering there is a well-developed mechanism to prevent the misuse and ensure timely completion of projects with proper supervision in this fund, the government should consider increasing the size of the fund. With the increased financial support, the fund can also be encouraged to lend to a wider bouquet of projects till the NBFC sector recovers.
In order to avoid the cascading impact of taxes and house prices, the government should use the budget session to refer the recommendations on the restoration of GST input tax credit to the upcoming GST council meet. For the real estate investment trusts, the government should reduce the timelines of investment from three years to one year for long-term capital gains taxation. This will ensure larger retail investor participation and will ease a long-term funding challenge for such projects, added Mr. Shishir Baijal.