New Delhi, Jan 22 (IANS): The National Real Estate Development Council (Naredco) on Tuesday urged the government to rationalise the GST rates on under construction properties and also solve the liquidity crisis at the earliest.

Speaking to reporters here, Naredco President Niranjan Hiranandani said that the apex body of the real estate sector has submitted its memorandum of recommendations for the upcoming Union Budget 2019-20 to the Finance Ministry and the Housing and Urban Affairs Ministry.

"GST on under construction properties should be brought down to 8 per cent with ITC (Input Tax Credit) and for affordable housing to 5 per cent with ITC," Hiranandani said.

Currently, the Goods and Services Tax (GST) on under construction properties is 18 per cent and that on affordable housing projects is 8 per cent.

Talking of the liquidity crisis, he said that for the last couple of years the non-banking financial companies (NBFCs) were the major source of liquidity for the sector, and after the recent crisis in NBFCs the real estate business is under severe financial stress.

"After the disaster which has taken place in IL&FS, we are in a quandary, because NBFCs have come into a crisis and the liquidity position of banks is not improving. If the industry wants to grow, both under the Pradhan Mantri Awas Yojana (PMAY) or under the affordable housing scheme or the rest of the real estate, liquidity has to be increased," he said.

Naredco has also asked the finance ministry and the Reserve Bank of India to address the liquidity issue at the earliest, said Hiranandani.

Chairman of Naredco, Rajeev Talwar said: "To add to the supply of housing, Naredco has also suggested bringing the services of companies engaged in the business of rental housing under the ambit of Section 80IBA and increasing deduction limit from rental income, under Section 24(a), from current 30 per cent to 50 per cent for general category and 100 per cent for handicapped persons, women and senior citizens".