New Delhi, Jan 22 (.) The National Real Estate Development Council (NAREDCO) on Thursday recommended to the union Ministry of Finance a slew of measures, including setting a higher limit for interest deduction on home loans and reinstatement of the Income Tax Settlement Commission.
Addressing the press conference here, NAREDCO Chairman Dr. Niranjan Hiranandani called for a housing revolution so that housing will be available for all. He also emphasised on the rental housing mechanism to provide access to buying one’s own house to everyone.
“It is suggested that the deduction on account of interest payment available under Section 22 of the IT Act 2025 should be made applicable from the year in which capital was borrowed, as for principal u/s 80c and should be to the extent of full interest paid, at least in respect of one house,” the apex real estate sector body recommended to the Finance Ministry.
“At least the limit of Rs 2 lakh should be raised to Rs 5 lakh or more for owner-occupied houses. Also, a five-year period for acquisition/completion from the year of borrowing should be dispensed with,” it added.
NAREDCO also suggested the reinstatement of the Income Tax Settlement Commission, which was established in 1976 to provide taxpayers a one-time opportunity to enter into a compromise and settlement arrangement with the Income-tax Authority to grant them relief from penalties and prosecution.
Praveen Jain, President of NAREDCO, said, “The real estate sector plays a critical role in India’s economic growth, employment generation, and urban transformation. Rationalising taxation, especially on housing finance, will directly stimulate end-user demand, provide much-needed impetus to a sector grappling with a significant housing shortage, and offer relief to homebuyers impacted by project delays arising from cash flow constraints, while restoring overall buyer confidence.”
Briefing on the taxation point, Jain explained that under Section 24(b) of IT Act 1961 (Section 22 of IT Act 2025), deduction on account of interest payment on housing loans is permissible to owners of rented dwelling units to the fullest extent.
But, in case of owner occupied houses the limit is set at Rs 2 lakh. Further, the deduction gets available after acquisition of construction is completed within five years from the end of financial year in which capital was borrowed.
The apex housing sector body noted that the current dispute resolution scheme excludes certain specific cases, including cases where lower appellate authorities disposed of the appeal prior to the specified date (22 July 2024), but the time for filing further appeals before higher appellate authorities remains open.
Elaborating on this development, Hiranandani, said, “ These exclusions compel taxpayers to continue with the conventional appeal process, even when they are willing to resolve disputes and settle their tax liabilities for peace of mind. To address these gaps in the existing framework, the government should reinstate the Income-tax Settlement Commission.”
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