Union Budget 2024-25: A Boost for Real Estate Development in India
This financial support is expected to catalyze significant real estate development in the region, enhancing market confidence and encouraging investment.
Union Budget 2024 25Real EstateUrban DevelopmentInfrastructureIndiaReal Estate NewsAug 02, 2024
The focus on urban and infrastructure development is expected to boost the real estate sector, with significant allocations made for the development of cities and industrial corridors. The 'Cities as Growth Hubs' initiative aims to rejuvenate urban areas under strain, with key measures including Transit Oriented Development for 14 large cities and a framework for creative brownfield redevelopment.
A significant allocation of INR 15,000 crore for the development of Andhra Pradesh’s capital city underscores the government’s commitment to urban infrastructure. This financial support is expected to catalyze significant real estate development in the region, enhancing market confidence and encouraging investment.
The budget also addresses urban and rural development through measures such as interest subsidies for rental housing, PPP models for rental housing for industrial workers, and the addition of 3 crore housing units under the Pradhan Mantri Awas Yojana (PMAY). These initiatives are designed to tackle the housing shortage and improve living standards in both urban and rural areas
The government’s decision to increase the standard deduction and lower tax slabs in the new tax regime for personal income tax is likely to increase disposable incomes among the middle-income group, thereby boosting demand in the affordable and mid-income housing segments.
The removal of indexation benefits for long-term capital gains (LTGC) tax may seem like an onerous burden at first, but deeper analysis reveals that properties held over long time frames that have benefitted from strong price upswings of 7-8 times attract lesser LTCG under the new LTGC of 12.5% (14.95% effective tax) without indexation, than the previous 20% LTGC with indexation.
The budget’s capex-led growth strategy, with an outlay of 3.4% of GDP amounting to INR 11.1 lakh crore, demonstrates fiscal prudence with a planned reduction in the fiscal deficit to 4.9% of GDP. This robust financial planning, along with strategic urban development policies, is set to create new urban clusters and spur real estate development across the country.
Frequently Asked Questions
What is the main focus of the Union Budget 2024-25?
The main focus of the Union Budget 2024-25 is on urban and infrastructure development, human capital enhancement, manufacturing growth, MSMEs, and driving consumption.
How will the budget impact the real estate sector?
The budget is expected to boost the real estate sector, with significant allocations made for the development of cities and industrial corridors, and initiatives to tackle the housing shortage and improve living standards.
What is the 'Cities as Growth Hubs' initiative?
The 'Cities as Growth Hubs' initiative aims to rejuvenate urban areas under strain, with key measures including Transit Oriented Development for 14 large cities and a framework for creative brownfield redevelopment.
How will the removal of indexation benefits for LTGC tax impact the real estate sector?
The removal of indexation benefits for LTGC tax may seem like an onerous burden at first, but deeper analysis reveals that properties held over long time frames that have benefitted from strong price upswings of 7-8 times attract lesser LTCG under the new LTGC of 12.5% (14.95% effective tax) without indexation.
What is the impact of the budget on the fiscal deficit?
The budget’s capex-led growth strategy, with an outlay of 3.4% of GDP amounting to INR 11.1 lakh crore, demonstrates fiscal prudence with a planned reduction in the fiscal deficit to 4.9% of GDP.
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