Finance Minister Nirmala Sitharaman will present Budget 2024 in Parliament on July 23 (File)
The real estate sector expects the government to address challenges faced by the industry and to announce initiatives to boost growth in the upcoming Union Budget. With expectations of the government's focus on affordable housing, the real estate industry is hopeful of a slew of measures to stimulate development in the residential projects segment.
Finance Minister Nirmala Sitharaman is set to present the Full Budget for the financial year 2024-25 on July 23.
Experts in the real estate sector and industry leaders have highlighted tax revisions, industry status and infrastructure development among the major initiatives needed to catalyse growth for all stakeholders.
According to Angad Bedi, Managing Director of BCD Group, the sector needs industry status to achieve the government's ambition of housing for all and becoming a $5 trillion economy by 2025. "The government should look at strengthening the regulations around the sector including RERA, single window clearances for all approvals and swifter resolution of stuck projects to accelerate the sector's growth," he said.
Mr Bedi also suggested the government should announce downward tax revisions and make changes to the GST input tax credit rules in order to reduce property prices and accelerate demand across all asset classes.
A section of the industry insiders also suggests that the Union Budget 2024 should extend the initiatives beyond the traditional expectations of single-window clearances and industry status.
They suggest increasing the deduction limit for interest payments on home loans from Rs 2 lakh to Rs 5 lakh, which could stimulate housing demand.
"The government should raise the deduction limit for interest payment on home loans from the existing Rs 2 lakh a year to Rs 5 lakh, which will add momentum to housing demand. For a large section of the population, affordability remains the biggest challenge. Hence, there should also be expansion in the definition of affordable housing as this would expand the benefits for homebuyers and boost the end-user demand. Any tax exemption from rental income will also encourage greater investment in residential real estate," said Ramani Sastri, Chairman and MD of Sterling Developers Pvt. Ltd.
These measures are seen as important steps for making properties affordable and strengthening demand across various segments of the real estate market.
"We expect the Union Budget 2024-25 to introduce progressive reforms to meet rising demands for residential and commercial spaces. Our top priorities include tax breaks for affordable housing projects to boost stagnant sales in the sector. Also, a revival of the credit-linked subsidy Scheme will make homeownership more accessible," said Madhusudan G, Chairman and Managing Director of Sumadhura Group.
The stakeholders also advocated for a revision in GST rates to boost demand and provide income tax relief on home loans.
Mr Sastri called for streamlining regulations and strategic fiscal measures to boost demand. Industry-friendly measures are anticipated to drive growth in the real estate sector and stimulate around 250 related industries, thereby promoting significant job creation.
"The upcoming Budget should introduce measures that will bolster this economic context. The Indian real estate sector continues to scale new heights in 2024 driven by positive market sentiments, economic expansion, urbanisation, evolving lifestyles, rising disposable incomes, better employment opportunities, increased business activity and government policies amongst others," he said.
Bhavesh Kothari, Founder and CEO of Property First, urged the government to announce tax relief and grant industry status to the real estate sector to boost growth.
"We urge the Finance Minister to implement tax reliefs in terms of reduction in GST rate along with an input tax credit on under-construction properties. Granting industry status to the sector would be another significant step that would catalyse growth and contribute to the nation's economy," Mr Kothari said.
Amid the speculations of the government's focus on infrastructure in the upcoming Budget, the real estate sector is hopeful of reaping benefits as higher spending on roads, highways, metro and railways could propel growth in both commercial and residential segments.
"We expect the government to continue focusing on more infrastructure development in highways, metro lines, planned satellite cities, etc. as it will help drive housing demand across the country," Mr Kothari said.
According to BCD Group's Mr Bedi, greater public and private investments in infrastructure, attracting higher foreign direct investment and promoting emerging sectors of real estate such as student and senior living will significantly contribute to the expansion of the sector.