After a decade of tepid growth, the real estate sector, which has witnessed a comeback following the pandemic, has lined up several key demands ahead of the budget. The demands include higher tax breaks on both home loan interest and principal, and separate deduction of principal repayment of housing loan as 8C under which it currently falls already has multiple options like PPF, EPF, ELSS and life insurance premium, among others.

“In real estate, we must keep demand for homes intact as housing is an accelerator for two hundred plus ancillary sectors. Raising the tax breaks on interest and principal amounts on home loans from ₹2-5 lakh will be the most welcome move for the industry and home buyers alike. That will cushion the blow of rising home loan EMIs,” said Amit Goyal, CEO, India Sotheby’s International Realty.

Pradeep Aggarwal, founder and chairman, Signature Global, says the real estate, especially the residential segment, has bounced and is playing a significant role in bringing momentum to the economy.

“Government should reconsider the loss set-off limit under the income tax head house property. Earlier, there was no such limit, but in the Finance Act 2017, the government restricted the amount of loss to up to ₹2 lakh per year under the head house property, which is allowed to be set off against income from other sources. This limit should be removed or enhanced to bring back investors in the sector. This will eventually support the rental housing market to meet demand,” Aggarwal added.

“Besides that, keeping in view high inflation and significant rise in borrowing cost in the last few months, there is an urgent need for tax sops, especially for home buyers in affordable and mid-segment housing, to overcome the financial hardship,” he added.

One of the key demands of the real estate sector is a separate section for the tax deduction on housing loan principal repayment, which is currently under Section 80C. Piyush Gupta, Managing Director, Capital Markets and Investment Services, Colliers India says currently, homebuyers can claim an income tax deduction on the principal repayment of their home loan.

“The maximum amount of deduction that can be claimed is ₹1.5 lakh per financial year. However, various deductions for other investments such as Public Provident Fund (PPF), Equity-Linked Savings Schemes (ELSS), and life insurance premiums are also a part of the section. There is a need to increase the limit of ₹1.5 lakh and separate the housing loan repayment benefit and to be dealt with it separately. This will enhance affordability and stimulate savings,” Gupta added.

Follow us on Facebook, X, YouTube, Instagram and WhatsApp to never miss an update from Fortune India. To buy a copy, visit Amazon.