Union Budget 2024-25: Revitalizing the Real Estate Sector
The real estate sector has high expectations from the upcoming Union Budget 2024-25, seeking policy changes to boost growth and sentiment.
Real EstateBudget 2024 25Modi GovernmentHousing SectorAffordable HousingReal Estate MumbaiJul 20, 2024
One of the foremost expectations from the upcoming budget is the grant of industry status to the entire housing sector. This status would potentially streamline operations and attract more investments into the housing market. The Indian housing sector has witnessed a buoyant period in 2024, marked by increased housing sales and new launches in the top seven cities. However, the momentum is predominantly skewed towards mid-range and premium housing segments. The affordable housing sector, crucial for addressing the housing needs of lower-income groups, continues to face challenges.
Measures such as tax breaks for developers and buyers are imperative to revive this segment. The revival of the Credit-linked Subsidy Scheme under the Pradhan Mantri Awas Yojana is critical to incentivise first-time buyers of affordable homes across urban centres. Experts suggest that to stimulate supply in the affordable housing segment, the government could consider reintroducing the 100% tax holiday benefits provided under Section 80-IBA of the Finance Act, 2016. This measure would encourage developers to focus on constructing affordable housing projects, thereby increasing the availability of budget-friendly homes.
Revising the criteria for defining affordable housing is another critical step toward widening the scope of benefits to more buyers. The current definitions, based on property size, price, and income criteria, need adjustment to reflect city-specific market dynamics. Rationalisation of GST rates for under-construction properties is also crucial, and lowering GST rates or reinstating ITC would enhance the affordability of under-construction homes, thereby boosting sales and benefiting homebuyers.
Introducing a single-window clearance system for real estate projects is crucial to reduce bureaucratic delays and improve ease of doing business. Such a system would streamline approvals and clearances, accelerating project timelines and fostering investor confidence in the sector. Experts believe that enhancing tax benefits under Section 24(b) and Section 80EEA would make homeownership more financially viable. Increasing deduction limits under these sections would incentivise more individuals to invest in real estate, particularly in affordable housing.
Promoting green and sustainable housing through tax incentives and subsidies would encourage environmentally responsible practices in the construction sector. These incentives could include tax rebates for developers adopting eco-friendly technologies and for buyers investing in energy-efficient homes. Granting infrastructure status to the real estate sector remains a critical demand to facilitate access to cheaper funding and streamline regulatory processes.
Anarock Group is a leading real estate consultancy firm, providing expert insights and research on the Indian real estate market.
Frequently Asked Questions
What is the main expectation from the upcoming Union Budget 2024-25 for the real estate sector?
The main expectation is the grant of industry status to the entire housing sector, which would potentially streamline operations and attract more investments into the housing market.
What are the challenges faced by the affordable housing sector in India?
The affordable housing sector continues to face challenges, including a decline in sales post-COVID-19, and the need for targeted interventions to revive the segment.
What is the Credit-linked Subsidy Scheme, and how does it benefit homebuyers?
The Credit-linked Subsidy Scheme is a scheme under the Pradhan Mantri Awas Yojana that provides incentives to first-time buyers of affordable homes across urban centres.
How can the government promote green and sustainable housing in India?
The government can promote green and sustainable housing through tax incentives and subsidies, encouraging environmentally responsible practices in the construction sector.
What is the significance of granting infrastructure status to the real estate sector?
Granting infrastructure status to the real estate sector would facilitate access to cheaper funding and streamline regulatory processes, enhancing project viability and attracting greater investments into the sector.
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