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Budget 2024 – Real estate awaits impactful policies and industry status to foster growth
The luxury real estate sector in India has shown significant growth potential in 2023, driven by positive market sentiments. Despite global and economic uncertainties, there has been a remarkable upswing in demand, which is expected to continue in the upcoming years. As the Interim Budget is eagerly awaited by the nation, the industry hopes that their concerns are addressed, contributions are recognised, and incentives are granted to further fuel the growth trajectory.
Granting Industry Status
Real estate and infrastructure developments have played a significant role in accelerating the economic growth of the country. However, the sector awaits to be granted industry status, so it can expand and grow to its full potential. This will help bring down the cost of capital, provide a single window of approval, fast-track cases, and provide exemptions and relaxations from stamp duty, tariffs and other levies.
Regulating Policies to Drive Progress
A key expectation from the industry is to reduce the high GST rate for developers, which would alleviate cost burdens and help to mitigate property prices. This could be achieved by bringing raw materials under a single slab.
The rationalisation of GST rates will further align with the government’s vision of ‘housing for all’, by enhancing affordability. The forthcoming budget is also expected to soothe the burden of down payments, increase credit availability, and provide flexible repayment options. Extending the existing limit for tax exemption under section 80C will benefit many to claim a deduction for the principal repayment. These regulations will not only stimulate demand but will also foster sustained growth for the sector.
Affordable Housing Segment
Amidst the record growth of the real estate market, the declining share of affordable housing has raised a few concerns. However, the industry is optimistic that the sector will be granted fresh tax exemption, policy impetus, and other fiscal support in the budget.
We hope the union budget to consider increasing the home loan rebate rate from Rs 2 lakhs to at least Rs 5 lakhs under the Income Tax Act Section 24. This will play a crucial role in improving the demand. Additionally, a reinstatement of the credit-linked subsidy scheme and potential adjustments to address the rising construction costs should mitigate the challenges.
Boosting Investment in the Sector
The luxury real estate sector requires government policies that can help boost demand and encourage investment. To keep up with the ever-changing landscape of the Indian real estate sector, the budget should consider revising the long-term capital gains on property. Shortening the holding period for residential properties as a long-term capital asset to 12 months would align with the current market dynamics.
Considering the significant contribution to real estate investment of Non-Resident Indians (NRIs) in achieving our current economic growth, India has devised several reforms attracting Foreign Direct Investment (FDI). These policies had an important role in revitalising the real estate sector. Further to this, we anticipate that the budget put forth a simplified and structured process to enhance the current interest.
The industry remains hopeful that the union budget will encompass measures to stimulate demand, prioritise growth, and at the same time acknowledge the prime role played by the sector in India’s economic landscape.
Source: Financial Express