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The Forum for People’s Collective Efforts (FPCE) – a national body looking into home buyers’ interest – has written to the Finance Minister, Arun Jaitley, seeking changes in income-tax laws and stricter implementation of anti-profiteering measures against developers who do not pass on GST benefits, in the upcoming Union Budget.
According to Abhay Upadhyay, President of the group and a member to the Central Advisory Council of RERA, a section of developers have not passed on input tax credit benefits to home buyers through a requisite reduction in prices.
“It may have already come to your notice that builders, though charging 12 per cent GST from buyers, are not passing on the benefit of input tax credit. This has led to an added burden on buyers of ongoing projects,” the letter written to the Union Finance Ministry says.
Accordingly, FPCE has suggested that the Anti-Profiteering Authority needs to take “stern action” against builders, and builder associations should be warned against such practices. A complaint mechanism should also be put in place to address the grievances of home buyers.
The forum has also urged the Finance Ministry to bring the entire real estate sector under the ambit of GST by bringing stamp duty and other registration charges under the new tax regime. Currently, only completed projects are exempt from GST.
Amending other laws
Interestingly, the forum has also requested an amendment to Section 24(b) in the Income-Tax Act where a home buyer will not get relief on interest on home loan in case he receives possession (of a house) after five years of taking the so-called loan.
"This limitation clause is punishing honest homebuyers for no fault of theirs, as delay in getting possession is solely due to the fault of builders and homebuyers have no role to play,” the letter further mentions.
The forum has also asked the Finance Minister to consider a scenario where in case an assessee is paying both EMI and rent and there is a delay in him getting possession, then there should be deduction for EMI paid from the total income of the assessee (over and above any other deduction).
Amongst the other recommendations, FPCE has also suggested changes be brought to the Insolvency and Bankruptcy Code 2016 where homebuyers are considered “primary secured creditors” and not unsecured ones. This would safeguard home buyers' investments in a project.
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