Real Estate Sector Expectations from Union Budget 2024-25
Realtors want industry status, removal of capital gains tax and GST rationalization to boost real estate transactions and contribute to India's economic growth.
Union Budget 2024 25Real Estate SectorIndustry StatusCapital Gains TaxGst RationalizationReal EstateJul 20, 2024
As the Modi 3.0 government prepares to present its first full-year budget, real estate developers are unanimous in their demand for significant reforms to achieve a $1 trillion real estate economy. Samir Jasuja, founder and CEO of PropEquity, emphasized the need for radical reforms, citing Dubai's real estate laws as an example. Dubai's laws, which include no capital gains tax, no tax on property rental income, and no tax on property purchases, have induced growth in the sector.
Removing capital gains tax on real estate would eliminate the tax paid on profits from selling property, boosting real estate transactions, increasing liquidity, and potentially lowering housing costs. Additionally, allowing homeowners to directly offset rental income against home loan EMIs would alleviate the double taxation burden on property owners.
Rationalization of GST rates is another popular wish among developers, which could potentially decrease overall housing costs. Mohit Malhotra, founder & CEO of NeoLiv, highlighted the importance of input tax credit under GST, which would provide developers with a financial incentive and boost sectoral growth for homebuyers and drive economic recovery.
The sector's long-standing demand for single-window clearance and industry status is also expected to provide the much-needed transparency and speed up project execution cycles. Industry status would enable developers to access subsidized loans, reduce their borrowing costs, and increase their competitiveness.
Other expectations from the budget include strengthening regulations around the sector, including RERA, single-window clearances for all approvals, and swifter resolution of stuck projects to accelerate the sector's growth. Increasing the deduction limit for interest payment on home loans from Rs 2 lakh to Rs 5 lakh is also expected to add momentum to housing demand.
Overall, the real estate sector is hopeful that the finance minister will address their needs and recognize the pivotal role they play in India's growth saga.
Frequently Asked Questions
What is the real estate sector's expectation from the Union Budget 2024-25?
The sector expects significant transformations and radical changes, including granting industry status, removing capital gains tax, and rationalizing GST rates.
Why is removing capital gains tax on real estate important?
Removing capital gains tax would eliminate the tax paid on profits from selling property, boosting real estate transactions, increasing liquidity, and potentially lowering housing costs.
How would rationalization of GST rates benefit the sector?
Rationalization of GST rates could potentially decrease overall housing costs, making homes more affordable for buyers.
What is the sector's stance on single-window clearance and industry status?
The sector believes that single-window clearance and industry status would provide the much-needed transparency and speed up project execution cycles, enabling developers to access subsidized loans and reduce their borrowing costs.
How would increasing the deduction limit for interest payment on home loans benefit the sector?
Increasing the deduction limit from Rs 2 lakh to Rs 5 lakh would add momentum to housing demand, especially given the substantial rise in housing prices and mortgage rates over the past 1-2 years.
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