Real estate players are looking forward to a positive budget and feel that this will be a feel-good budget for the sector. All the stakeholders feel that the sector has shown resilience with sales recovering to almost pre-Covid levels in FY 2023-24. The sector has also contributed significantly to India's GDP which is expected to move into double digits territory in this decade, from a current level of approximately 8 per cent.
The sector broadly hopes for a reduction in GST rates, more tax sops for home buyers, and industry status, which has been long pending.
“One of our primary expectations is a reduction in GST rates on construction materials to enhance affordability and make home-buying more accessible. Additionally, we seek 'industry status' for the real estate sector as this would be a major stride on the infrastructure front. This will further enable developers to lower the cost of borrowing and pass on the benefits to customers,” said Kalyan Chakrabarti, CEO, EMAAR India.
Players in the sector have expressed the need for more tax sops for both home buyers as well as investors in the sector. “The government should raise the deduction limit for interest payment on home loans from the existing Rs 2 lakh a year to Rs 5 lakh, which will add momentum to housing demand; reduce GST reduction on under-construction properties; and effect adjustments in raw material pricing. For a large section of the population, affordability remains the biggest challenge and hence there should also be expansion in the definition of affordable housing as this would expand the benefits for home buyers and hence boost the end-user demand. Any tax exemption from rental income will also encourage greater investment in residential real estate,” said Ramani Sastri, chairman and MD, Sterling Developers Pvt. Ltd.
Sastri also expects that the maximum tax rate of 30 per cent can be reduced to improve the individual's buying power. “The budget should offer a degree of personal tax relief, either by ways of lower tax rates or by readjusting tax slabs, which is the need of the hour. There is a strong case for interest subsidy to first-time home buyers as this will boost sales in the real estate sector. There is a specific need for income tax relief on a second home and positive measures with regard to long-term capital gains rationalisation, which will benefit home buyers in a big way and also stimulate the real estate sector.”
A few have also expressed hopes that the budget will focus on infrastructure development, affordable housing, and ease of doing business as it will be instrumental to shaping the sector's trajectory. “We anticipate a strong emphasis on policy measures that encourage sustainable development, smart cities, and digitisation within the real estate landscape. A reduction in home loan interest rates and repo rates, coupled with special bank and EMI discounts, will be key to supporting continued growth. Recognising millennials as the driving force in the property market and revising the price cap for affordable and mid-segment homes can invigorate their home-buying spirit. Additionally, in alignment with the global shift towards sustainability, we look forward to incentives or subsidies for green building certifications and renewable energy installations in commercial real estate projects. We propose bringing REIT units in parity with listed equity. Reducing the holding period for long-term capital gain benefits from 36 months to 12 months would make REITs more attractive to investors,” said Aditya Virwani, COO, Embassy Group.
Major players feel that the real estate sector is at a crucial point, anticipating opportunities beyond conventional boundaries. With signs of pre-pandemic stability, the industry is poised for sustained growth. A few targeted measures will surely help the industry.
“We advocate for a reduction in long-term capital gains tax, waiving notional rent on second properties, and aligning the income tax rate with corporate rates at around 25 per cent. In order to revive the sector, the government should focus on affordable housing. We propose to reduce GST rates and interest subventions for affordable housing. Single window clearance for the sector has been pending for a long time. We hope to see it granted in this year’s budget. At the same time, we support the industry-wide call for granting 'industry status' to the residential sector, aligning with the government's vision of "housing for all." Additionally, supportive measures, including NAREDCO's appeal for an Rs 50,000 crore fund, will also align with the government's vision of housing for all and could significantly fortify the sector's trajectory. The budget is a chance to redefine affordability as the diverse locations demand different price caps instead of uniformity. Recognising changing investment dynamics, we suggest expanding Section 80C limits for millennials and Gen-Z home buyers,” said Venkatesh Gopalakrishnan, director, group promoter’s office, MD & CEO - Shapoorji Pallonji Real Estate (SPRE).
