Govt proposed to give direct & indirect tax relief to house owners & tenants by Centre Govt, State Govt & Local Governments. The draft rental housing policy has proposed this scheme based on the fact that renting of homes is treated as a “commercial” activity which increases property tax for individuals and service taxes for institutional rental housing operators such hostels/ PGs and dormitories wherein electricity and utility rates are calculated at par with commercial properties and thereby reducing the rental yield.
Currently Income tax Act provides exemption of tax deduction for HRA for an employee, which is around 40% of the basic salary. It is estimated that the urban poor might be paying monthly 30% of their income as house rent without any incentives. The share is much higher in the case of people with less salary.
The policy suggests to states to recognize that many urban households live in rental and shared housing, and hence they should consider renting to be one of the various ways to improve housing condition. Some of the recommendations include estimating the number of rental households and landlords, setting up of a cheap arbitration and conciliation service for landlords and tenants that works quickly and facilitate online registration of rental properties, property dealers working in informal sector, grievance redressal system.