Union Budget 2024: As Finance Minister Nirmala Sitharaman prepares to present the first budget of Prime Minister Narendra Modi’s third term, the real estate sector is teeming with anticipation. Industry players are hopeful for measures that will drive growth and stabilise the market. Key stakeholders have been vocal about their priorities, advocating for reforms and initiatives that address critical challenges and foster sustained development in this pivotal budget.
Tax Incentives for Homebuyers
Prashant Sharma, President, NAREDCO Maharashtra said enhancing tax benefits for homebuyers, especially under Section 80C and Section 24(b), would provide a much-needed boost to housing demand.
“Increasing the limit of deduction on home loan interest will make home ownership more attractive and affordable for the common man,” Sharma added
Sharma also suggested the following measures;
Single Window Clearance: Introducing a single window clearance system for all real estate projects would streamline approval, reducing delays and costs. This measure would accelerate project completion and enhance the ease of doing business in the sector.
Incentives for Affordable Housing: Continued focus on affordable housing is crucial.
“We urge the government to extend the benefits under the Pradhan Mantri Awas Yojana (PMAY) and provide additional incentives to developers engaged in affordable housing projects. Also, there’s a need to redefine the definition of affordable housing, proposing an increase in the cap from Rs 45 lakh to Rs 1 crore, particularly in metro cities. This will help bridge the housing gap and provide homes to the economically weaker sections of society, boosting both affordable and mid-segment housing,” Sharma said.
Addressing Liquidity Issues: The real estate sector continues to face liquidity challenges.
“We expect the budget to introduce measures that ensure easier access to financing for developers, especially small and medium-sized enterprises. Enhancing the flow of funds through banking and non-banking financial institutions is essential for sustaining project momentum. Also, there’s a need for an increase in the SWAMIH stress fund and the creation of a second tranche with a corpus of Rs 50,000 crore, aimed at completing stalled realty projects and ensuring adequate liquidity.”
Reforms in Land Acquisition: Simplifying land acquisition processes and reducing the costs associated with it will be instrumental in boosting real estate development. Transparent and fair land acquisition policies will encourage more developers to undertake new projects.
Focus on Rental Housing: To cater to the urban population and the migrant workforce, policies promoting rental housing should be prioritised. Incentives for developers to build rental housing projects will help address the housing needs of a diverse population.
Digital Transformation: Encouraging the digital transformation of the real estate sector through technological advancements and digital infrastructure will lead to greater transparency and efficiency. Incentives for adopting PropTech solutions will further modernise the sector.
Infrastructure Status for Real Estate
Pritam Chivukula, Co-Founder & Director, Tridhaatu Realty and Vice President, CREDAI-MCHI,urged granting infrastructure status to the real estate sector.
“It will facilitate easier access to funding at lower interest rates. This move will not only reduce the cost of capital for developers but also accelerate the pace of infrastructure development, leading to overall economic growth,” Chivukula said.
Chivukula also suggested the introduction of policies and incentives to promote rental housing will help address the housing needs of a growing urban population. This includes tax benefits for rental income and schemes to encourage private participation in rental housing projects.
Revival of Stressed Projects
Chivukula highlighted the need for Special provisions and financial packages for the revival of stalled and stressed real estate projects will help protect the interests of homebuyers and ensure the completion of projects. This will also aid in clearing the unsold inventory and reviving the real estate market.
Relaunch of the CLSS Scheme
Mohit Jain, Managing Director, Krisumi Corporation, said, “Given the government’s ongoing push for housing for all, we also anticipate the relaunch of the CLSS scheme, which will boost housing demand across various segments.”
Jain also underlined that the Government should also look at implementing the single window clearance system for all project-related approvals, a long-pending demand of the industry. This will considerably reduce delays thereby benefitting all stakeholders including the government, developers as well as end users i.e. home buyers.
GST Reform in Real Estate
Vedanshu Kedia, Director, Prescon Group, felt the current Goods and Services Tax (GST) structure for the real estate industry needs to be rethought.
“Real estate is the most capital-intensive industry and we feel that allowing an input tax credit for expenses made by real estate companies can not only help real estate developers manage their cash flows better but also help rationalise prices for end users and make it more affordable. We also advocate for the rationalisation of GST rates to ensure they are more straightforward and affordable. A streamlined GST system will reduce the overall cost burden on homebuyers and developers, promoting greater activity in the sector,” Kedia added.
Kedia also urged the government to revise capital gains taxation to make it more favourable for real estate transactions.
NRIs and Real Estate
Kedia pointed out that Non-Resident Indians (NRIs) have always been significant contributors to the Indian real estate market.
“We recommend the introduction of policies that make it easier for NRIs to invest in Indian properties. Simplifying regulations, providing tax benefits, and ensuring a hassle-free repatriation process will attract more NRI investments, thereby boosting the sector,” Kedia added.
Focus on Millennial buyers
Samyak Jain, Director, Siddha Group highlighted that millennials represent a substantial portion of potential homebuyers today. However, increasing property prices and stringent financing options often make homeownership a distant dream for many.
“We urge the government to introduce targeted schemes that cater specifically to millennials and first-time homebuyers. Making homeownership more accessible to this demographic will not only fulfil their aspirations but also inject fresh demand into the housing market,” Samyak urged.
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