Union Budget 2024: A Mixed Bag for the Real Estate Market
Real estate experts weigh in on the Union Budget 2024, analyzing the provisions introduced by Finance Minister Nirmala Sitharaman for the sector.
Real EstateUnion BudgetNirmala SitharamanInfrastructure DevelopmentAffordable HousingReal Estate NewsJul 24, 2024
According to LC Mittal, Director of Motia Group, the government has put special consideration on affordable housing, infrastructure development, and urban planning. The Finance Minister announced that three crore additional houses under the PM Awas Yojana will be constructed in rural and urban areas. Additionally, under PM Awas Yojana Urban 2.0, the housing needs of one crore urban poor and middle-class families will be addressed with an investment of Rs 10 lakh crore.
Experts say this push towards urban housing will stir up demand and construction activities. However, Mittal also highlights that increased demand can lead to rising property prices and possible overcrowding in urban centres as more people are drawn to cities.
The Budget has also introduced provisions to encourage states to moderate stamp duty rates and consider further lowering duties for properties purchased by women. This reform is an essential component of urban development schemes.
Additionally, the increase in the long-term capital gains tax rate to 12.5% from 10%, along with a new exemption limit of Rs 1.25 lakh per year, and the rise in the short-term gains tax rate to 20% from 15%, will have a mixed impact. Real estate, which has had a 20% long-term capital gains tax rate so far, will benefit; however, it increases the tax burden on investors in other sectors.
Infrastructure development is also expected to boost the real estate market. The Union Budget allocated Rs 11,11,111, which is 3.4% of the GDP, for infrastructure development. This will enhance the attractiveness of real estate in developing and underdeveloped areas that were previously inaccessible.
The development of industrial parks with complete infrastructure in partnership with state and private players across 100 cities under the National Industrial Corridor Development Program is anticipated to spur industrial growth, create employment opportunities, and boost economic activity.
The Union government proposed ‘Bhu-Aadhar’ in rural areas, a UID number for land and digitization of all urban land records as part of several land-related reforms in the Budget. This means smoother and more secure transactions, reducing the risks associated with property disputes and unclear titles.
While the Budget did not grant industry status to the real estate sector, experts maintain that the current provisions introduced in this Budget will positively impact the real estate market, boosting growth directly or indirectly.
Frequently Asked Questions
What are the key highlights of the Union Budget 2024 for the real estate market?
The Budget has introduced provisions for affordable housing, infrastructure development, and urban planning, which are expected to boost the real estate market.
How will the increase in long-term capital gains tax rate affect the real estate market?
The increase in long-term capital gains tax rate to 12.5% from 10% will have a mixed impact, benefiting real estate but increasing the tax burden on investors in other sectors.
What is the significance of infrastructure development for the real estate market?
Infrastructure development will enhance the attractiveness of real estate in developing and underdeveloped areas, making them more desirable for both residential and commercial investments.
How will the development of industrial parks affect the real estate market?
The development of industrial parks will spur industrial growth, create employment opportunities, and boost economic activity, leading to increased demand for real estate.
What is the significance of ‘Bhu-Aadhar’ for the real estate market?
‘Bhu-Aadhar’ will provide a UID number for land and digitize all urban land records, making transactions smoother and more secure, and reducing the risks associated with property disputes and unclear titles.
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