Homebuyers’ expectations from Union Budget-FY 2021–22

BY--M S Shankar, General Secretary, Forum for People’s Collective Efforts (FPCE)

The unprecedented pandemic has impacted severely the Homebuyers community and they are in dire need of support from GOI. 

Homebuyers are facing job losses and pay-cuts and no support were extended except for a 6 months moratorium of EMI. It was nightmare faced by Homebuyers which has added to the burden of Rent, EMI, loss of compensation and delay while in contrast, the builders have got a free hand to delay the project by 6 to 9 months more, without any liability of penalty, interest, compensation as envisaged under RERA, all through an illegal force majeure extension. 

Further, the Homebuyers need transparency on the utilisation of special fund SWAMIH (Special Window for Affordable and Mid Income Housing) created to complete the pending projects based on last mile funding with a monthly comprehensive report on the status of projects funded, number of units completed, total loans disbursed from such fund project wise, etc.

It’s time for the Government to invest its policies and prescriptions in the interest of Homebuyers as despite the innumerable concessions provided to the Builder’s community by the years past as well due to this pandemic, there has been no recovery in the Real Estate sector and keeping this in mind, Following are my suggestions and expectations from this Budget 2021-2022, which will be beneficial for millions of homebuyers. 

1 Income up to Rs. 12 lakhs per annum should be exempt from Tax as to lead a respectful life, tax free income of Rs. 1 lakh per month is not falling under higher pay pockets, considering the cost of expenses to be incurred for EMI Payment towards Home Loan (MIG House) / Rent, Education of children, Dependent parents and to maintain basic standard of living and to save for post-retirement life.

2 To encourage saving/expenditure, limit of tax deduction under section 80C which has remained unchanged for last so many years should be increased to Rs. 3 lakhs and should include deduction for expenses incurred also for the payment of electricity, max 10% cost of New Motor Car purchased of not more than 15 lakhs of value (i.e., No deduction if value of motor car is more than 15 lakhs), purchase of Air-Conditioner and Refrigerator of minimum 3 star ranking. This will also encourage spending on such durables and help in the revival of consumption in the economy.

3 Section 24(b) of the Income Tax Act 1961 should be amended to provide for deduction of interest from Income from House property even after possession of the house is received from builder after more than 5 years i.e., to remove the limitation of 5 years for claiming deduction under this section. This limitation clause is punishing honest homebuyers for no fault of theirs as delay in getting possession is solely due to fault of builders and homebuyers has no role to play and on top of it he goes on to pay his dues to builders on time. 

4 In case where assesses are paying both EMI and rent and date for scheduled handover of possession has passed, there should be deduction for EMI paid from the total income of such assesses over and above any other deduction being currently provided.

5 Needless to say, double burden of EMI and Rent is breaking the backbone of a homebuyer for no fault of his and he has to compromise with health and education of his family. 

6 The limit under section 10(13A) towards House Rent Allowance needs to be enhanced to higher of ‘either the actual rent paid or the allowance received’ in order to incentivize the salaried class, who have been the most honest tax payers of the country. 

7 Presently Resident Welfare Associations (RWAs) are required to pay GST on monthly subscription/contribution charged from its members, if such subscription is more than Rs.7,500 per month per member and the Annual Turnover of RWA by way of supplying of services and goods is also Rs. 40 lakhs or more. In view of the fact, that RWAs are not doing business or providing service with objective to maximize profits and therefore it is only fair to exempt medium size RWAs from GST compliance. In view of this background, it is our suggestion to increase the threshold of subscription from members to Rs 15,000 per month per member with annual turnover limits also raised to Rs 100 lacs p.a for RWAs to be covered under GST. 

It is widely felt among homebuyers and middle-class citizens that they have been ignored and neglected in terms of tax concessions which they deserve to receive. It is their hope and expectations from the Government to get support as they have diligently been paying their dues not only to the builders but also to the Government and Banks in the form of taxes and EMIs.