The Indian real estate sector has seen a rebound in 2022, and is now looking for reforms and incentives from Finance Minister Nirmala Sitharaman in the upcoming Union Budget 2023. The industry players and experts are eyeing announcements ranging from industry status to the segment, increase in the affordable housing price band, tax rebate, rationalisation of GST and reforms for better infrastructure that will further help the growth in the sector. “There is quite a bit of overlap with previous years in the form of recurring demands which have, so far, not been or insufficiently met. The demands for single-window clearance and industry status for real estate are among the recurrent ones, and have yet to be addressed. The government must offer more incentives to boost affordable housing. There is a need to make this segment attractive again, not least of all because it resonates well with the government’s housing for all initiative,” said Anuj Puri, Chairman, ANAROCK Group.
“The liberalisation of section 24 aligned with inflation numbers, single-window clearances, expansion of affordable home’s definition as per the current standards and finally, the industry status for RE are core, and long-standing RE demands which should be looked at as well,” said Vikas Chaturvedi, CEO, Xanadu Group. “The top priorities on a scale of five were, increase tax rebate slabs, encourage consumption by home buyers, enhance building of social infrastructure to invite home buyers, make room for more buying capacity in terms of employment and jobs and ensuring housing for all turns into a dream come true,” said Himanshu Jain, VP – Sales, Marketing & CRM, Satellite Developers Private Limited.
Demand for Industry status
Real estate sector has proved resilient despite the headwinds in the global economy along with the inflationary pressure, and the sector, in partnership with infrastructure, has been driving GDP growth over the years. And granting it an industry status will prove to be a boon for the growth of the segment, sector leaders say. “The real estate sector needs to be given industry status. We expect policies and reforms that will further boost the industry, like tax breaks, single-window clearance, encouragement of home purchase and rationalisation of GST for raw materials,” said Ramesh Ranganathan, CEO, K Raheja Corp Homes.
Push to affordable housing
Affordable housing has been one segment which the Modi-led government has stressed on since taking charge in 2014; however it was largely derailed since the pandemic in 2020. The upcoming budget, therefore, is a chance for the real estate players to take the government’s focus, yet again, towards affordable housing supply. “The affordable housing supply by private players has reduced significantly since Covid-19, largely because its buyer class was impacted economically and hence went into wait and watch mode. Now, there is a need to make this segment attractive again, not least of all because it resonates well with the government’s housing for all initiative,” said Anuj Puri.
To further this objective, industry players are also looking at a tax deduction limit for home loans from 2 lakh to 5 lakh per year. “The central government has done a lot of work for the real estate sector with landmark initiatives in the years 2021-2022, one of which was affordable housing, also known as Pradhan Mantri Awas Yojana (PMAY). The sector has pinned its hopes on the upcoming Union Budget, expecting continued support through provisions,” said Kaushal Agarwal, Chairman, The Guardians Real Estate Advisory.
Piyush Bothra, Co-founder and CFO, Square Yards talked about ticket-wise criteria for the affordable housing in metro and non-metro cities that tallies with local market realities. “The Rs 45 lakh limit should be increased to Rs 80 lakh in metro cities and 60-65 lakh in non-metro cities so that more homes are within the affordable price range and people can take benefits of lower GST rates, government subsidies and tax deduction benefits on home loans,” he said.
Besides tax deduction limits for home loans, industry players are looking at overall GST and tax rationalisation in the upcoming budget. “The repo rate hike has slowed down sales in the last few quarters. However, we are hopeful that it won’t be the case in the new financial year. The rate of income tax should be in line with the corporate tax rates, and we sincerely urge for it to be standard at about 25 per cent across the board,” said Venkatesh Gopalkrishnan, CEO, Shapoorji Pallonji Real Estate.
Meanwhile, Ramani Sastri, Chairman & MD, Sterling Developers Pvt Ltd, said, “There is an express need for more tax sops for homebuyers as well as investors. There is a specific need for income tax relief on a second home and positive measures with regard to long-term capital gains, which will benefit home buyers in a big way and also stimulate the real estate sector. We feel that the capital gains tax rate should be reduced from 20 per cent and the Rs 2 crore cap on capital gains for reinvesting in two properties should also be removed.” Industry players are also looking at personal tax relief, either by ways of lower tax rates or by readjusting tax slabs. “Overall, to boost the consumption in this sector, the government should focus on providing more liquidity to the taxpayer and the appetite from end users needs to be rekindled through targeted demand side measures,” Ramani Sastri said. Besides, the real estate sector is looking at announcements that would include allowing input tax credit to the sector and also reduction of GST in key construction materials like steel, cement, blocks, tiles, etc.
Even as the government spending on infrastructure has been ‘exemplary’, real estate sector is looking at further boost to it in the budget. “The positive correlations of infrastructure development with all real estate asset classes is well established,” said Anuj Puri. Venkatesh Gopalkrishnan also maintained, “The infrastructure in terms of good roads for developing new projects and for developing tier-II cities should also be considered, as it positively correlates with the real estate sector.”