The Union Budget 2023, which is the final comprehensive budget of the current administration, is scheduled to be sent to Parliament in February. The real estate sector is rife with speculations about what new measures will be announced to revive the industry.
Real estate players expect the 2023 budget to focus on supporting rental housing and affordable housing, and strengthen current funding channels to provide liquidity to stalled real estate projects.
The government has also been urged to increase the affordable housing price band, in order to make homes more accessible to middle-class buyers. Other demands include tax incentives for developers and home buyers, as well as easier access to finance.
It remains to be seen what measures will be announced in the Budget 2023, but the real estate sector is hopeful that it will receive some much-needed relief.
Industry Status for the Sector
The real estate sector is hoping for industry status in the upcoming budget.
Industry status will bring the sector under the ambit of the Companies Act, and will help in creating a level playing field. This will help in attracting more foreign investment and will also give the sector access to cheaper finance.
The government has already announced several measures to revive the real estate sector, but industry status is still pending. The real estate sector is hoping that the budget will finally announce this long-pending demand.
Also Read: Here’s what taxpayers expect from Union Budget 2023
Increase in the Affordable Housing Price Band
The affordable housing price band should be increased to include properties priced up to Rs 80 lakh.
You are a homebuyer who wants to invest in a property that is within your budget. However, the current affordable housing price band does not include properties that are priced up to Rs 80 lakh. This means that you have to shell out more money than you can afford for a property that is classified as ‘affordable’.
The government should increase the affordable housing price band to include properties that are priced up to Rs 80 lakh. This will give more people the opportunity to invest in a property that is classified as ‘affordable’.
Tax Benefits for Homebuyers and Developers
You are a homebuyer who is looking to invest in real estate. You are hoping that the budget will announce some tax benefits that will make the process more affordable.
You are a developer who is looking to invest in real estate. You are hoping that the budget will announce some tax benefits that will make the process more profitable.
Boosting Infrastructure Development
You can also expect the Union Budget of 2023 to provide some impetus for infrastructure development in tier-II and tier-III cities. This push could come through tax incentives, and other forms of financial assistance. This will help promote development in smaller cities, helping them catch up with bigger urban centers.
Infrastructure projects like affordable housing, green buildings and smart cities will get a fillip from this push. Such measures can go a long way in achieving India’s goal of providing housing for all by 2022.
Stimulating Foreign Investments
The government should consider providing tax incentives to international investors in order to stimulate foreign investments in the sector. This would not only help developers diversify their funding base, but also give a much-needed boost to a sector that has been struggling. Moreover, it would also open up new opportunities for international collaborations in terms of technology and innovation. The reduction in the withholding tax rate on FDI would also provide the necessary push for real estate growth.
Enhancing Rental Housing Market
One of the key demands is that the government should take steps to promote and enhance the rental housing market by providing tax incentives. You can expect measures like allowing for deductions for such rent payments, or giving preferential tax treatment for rental income. This will help ease the pressure on the residential real estate sector and make it more attractive to investors. Moreover, it can also spur the growth of much needed rental housing in India.
There are high expectations from the upcoming Indian Budget 2023 for the real estate sector. The industry is hopeful that the government will finally grant it industry status, which will help it grow further. Additionally, tax incentives are also expected, especially for the affordable housing segment. While not all demands may be met, it is believed that this budget will bring some relief to the sector.
(By Shiwang Suraj, Founder & Director, Inframantra)