Being upbeat about the growth the real estate segment has witnessed over the last couple of years after Covid-19, the sector has high hopes from the budget. Rationalisation of GST rates, further push towards affordable housing and granting a full-fledged industry status are some of the demands of the real estate segment. Additionally, there is also a demand to increase the home loan interest rebate to boost the sector. Many players are also demanding that the clearance window should be streamlined so that things move smoothly in the segment.
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Many stakeholders feel that as the real estate sector evolves with innovative technologies and tailored infrastructure, it is crucial for the sector to have an ‘Industry status’ in the Modi 3.0 budget 2024.
“It is also critical to include the real estate industry in the GST under a one-nation, one-tax framework. The sector is crucial to the economy, accounting for around 8 per cent of total GDP. While residential real estate is experiencing a significant surge with historic high numbers, additional tax relief for individuals is essential to combat rising inflationary pressures. This can potentially be accomplished by increasing the deduction for interest on home loans from Rs 2 lakhs to Rs 5 Lakhs. The current surge in interest rates has resulted in higher Equated Monthly Installments (EMIs) for homebuyers, limiting fund utilisation, thereby limiting the potential of the sector at large,” remarked Amit Jain, Chairman and Managing Director, Arkade Developers.
The Indian housing sector remained upbeat in 2024 till date, with housing sales and new launches creating new peaks in the top seven cities. Sales reached an all-time high at about 4.93 lakh units in FY23-24, while 4.47 lakh units were launched.
“Many interest stimulants previously extended to buyers and developers of affordable housing have expired in the last two years. This important segment must be revived with high-impact measures like tax breaks for developers so that they will focus more on affordable housing, and for buyers to improve affordability. The credit-linked subsidy scheme under the PMAY which expired in 2022, should be revived to incentivize first-time buyers of affordable homes across cities. This will once again invigorate demand in this segment,” pointed out Anuj Puri, Chairman – ANAROCK Group.
“Subject to criteria specified under government guidelines, the scheme was previously available for housing loans to EWS/LIG buyers in new constructions and for the addition of rooms, kitchen, toilet etc. to existing dwellings. Also, under PMAY (Rural), one could avail of this subsidy for all 'kaccha' homes being converted into 'pucca' ones, provided they fulfil the eligibility criteria,” said Puri.
He further added that the government can also rationalise the GST rates for under-construction properties. “The current rate of 12 per cent without input tax credit (ITC) is considered high and deters buyers from investing in under-construction homes. A reduction in GST rates, or reinstatement of ITC, would make under-construction properties more attractive, thereby boosting sales and easing the financial burden on buyers,” added Puri.
Many also feel that fast-tracking clearances on the part of the government to further boost the sector. “Streamlining regulatory processes and expediting approvals and clearances would reduce delays, thereby positively impacting project cost, execution and returns. Extending corporate tax benefits and rationalising long-term capital gains tax would attract investments in this sector is crucial for sustaining long-term growth,” remarked Arshdeep Sethi, President- RMZ Real estate, RMZ Corporation.
The government can also give a boost to the segment by redefining Priority Sector Limits (PSL) in the sector. “Owing to the rising cost of construction, the government could also consider taking steps such as redefining PSL limits from the current Rs. 35 lakhs in a metro location to Rs. 50 lakhs and Rs. 25 lacs in a non-metro to Rs. 35 lakhs and merging both PMAY Urban and PMAY Rural schemes for CLSS subsidy while keeping the subsidy amount the same. Furthermore, we would also suggest the government redefine the income criteria of EWS to Rs. 5 lakhs and LIG to Rs. 10 lakhs. This was last done in 2015 and now with the evolving times require attention.
“Finally, we would also suggest the central and state governments work collectively towards creating an affordable housing inventory under the Public Private Partnership which could provide impetus to citizens thereby empowering and encouraging them to opt for home ownership,” said Rishi Anand, MD and CEO of Aadhar Housing Finance Ltd.
