FAIRA seeks Centre to bring down short-term capital gains tax in budget

CHENNAI: The Federation of All India Real Estate Association (FAIRA) representing the real estate industry has sought the Centre to offer sops during the budget stating a boom in the sector would also increase tax collection.
FAIRA National President A Hendry said the real estate sector accounts for eight per cent of the gross domestic product and was also the second largest employment provider after agriculture.
"If the forthcoming budget can offer sops to make investment in housing more attractive, the real estate sector will boom...A boom in real estate will also increase tax collection, as it is among highest tax paying sectors," he said in a press release.
He sought a separate provision allowing deduction of principal repayment up to Rs 2 lakh would provide higher tax benefits to home buyers; removal of restriction on setting off the loss from real estate properties against other heads of income and a reduction in the holding period of Real Estate Investment Trusts for long-term capital gains.
"Since the launch of new affordable housing projects were severely impacted during the pandemic, a three-year window of extension of this scheme would help the developers to start new projects and construct more affordable houses," he said.
FAIRA also requested the Centre to bring down the short-term capital gains tax from 30 per cent to 20 per cent and to increase the home loan interest deduction from Rs two lakh to Rs 5 lakh for tax rebate.
On the impact of Goods and Services Tax, FAIRA said GST on cement and steel is 28 and 18 per cent, respectively and the tax outgo has spiked along with the rise in these commodity prices.
As developers cannot claim tax credits for GST paid on input items, this amount gets added to the construction cost and leads to higher prices for home-buyers, FAIRA said.
The association urged the government to allow input tax credit to enable tax savings and give room for developers to lower prices.