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Budget 2022 may offer sops for Green buildings in line with Govt’s ambitious Net Zero target

The upcoming budget is likely to offer some incentives to environment-friendly practices to achieve India’s Net Zero goals.

The budget can provide for tax benefits in the form of time-bound exemption of profits from taxability, other tax incentives for developers engaged in developing sustainable commercial and residential buildings.

With India announcing an ambitious target of net-zero emissions by 2070 at COP26, the upcoming budget is likely to offer some incentives to environment-friendly practices to achieve India’s Net Zero goals. Industry experts expect that attractive incentives will be introduced across industries, especially construction and real estate, to achieve India’s Net Zero goals.

Commenting on the expectations towards a ‘Green Budget’, Vivek Jalan, Partner, Tax Connect Advisory, a multi-disciplinary tax consultancy firm, said, “Real estate is one of the areas, wherein the Finance Minister may announce some sops to encourage construction of Green buildings.”

“Under GST, Input Tax Credit is not available on Civil Work for construction of buildings. It is expected that to incentivize and promote green buildings, ITC is made available for construction of green buildings,” Jalan said.

The real estate industry and consultants too have similar expectations from the budget, which is scheduled to be presented on February 1.

Rishi Raj, COO, Max Estates Ltd, said, “As a progressive real estate player, we want to make a positive contribution to the environment. We have consciously made choices that minimize the carbon footprint during the lifetime of our assets. Our recent Sustainability Report, released within the first few years of the organisation’s inception, outlines our core sustainability and ESG strategy, which is divided into several themes like biodiversity, health and well-being, compliances, circular economy etc. & corresponding relevant goals. Our ultimate goal is to make Net Zero Buildings. LEED certification & IGBC Rating of all our assets is a testimony to the same.”

“Government interventions and policy changes like tax rebates for meeting set environmental standards and certifications, green taxes on harmful environmental activities, and subsidies on use of green products and services like solar panels, electric vehicles and carbon-neutral materials can go a long way in furthering the agenda of sustainability, which has steadfastly become the need of the hour,” Raj added.

Constructing high-performance buildings, replete with wellness and energy-saving measures, involves different architecture, planning and technology and, hence, should be incentivized.

“The budget can provide for tax benefits in the form of time-bound exemption of profits from taxability, other tax incentives for developers engaged in developing sustainable commercial and residential buildings. Future buildings will factor in aspects like improving natural lighting, providing greenroofs and using renewable sources of energy, sewage treatment, rainwater harvesting, etc to upgrade the way we live and work,” said Vimal Nadar, Head and Senior Director, Research, Colliers India, who is also expecting similar incentives.

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