Budget 2024 Expectations: Real estate

9 Jul 2024 , 08:51 AM

Real estate sector plays a pivotal role in the economy, contributing significantly to employment and GDP. Hence, the upcoming budget should introduce measures that will bolster this economic context. The Indian real estate sector continues to scale new heights in 2024 driven by positive market sentiments. economic expansion, urbanization, evolving lifestyles, rising disposable incomes, better employment opportunities, increased business activity and government policies amongst others. The desire for homeownership remains undeterred among consumers, as residential sales continue to breach previous highs. This year, the demands go beyond the usual expectation of single-window clearance and industry status, which could unlock financial advantages and streamline project approvals. There is an express need for more tax sops for both homebuyers as well as investors. 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 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 homebuyers and hence boost the end-user demand. Any tax exemption from rental income will also encourage greater investment in residential real estate.

A moderate reduction in GST rates for the real estate sector would also make homes more affordable and spark demand. We also expect the maximum tax rate of 30 per cent to 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 homebuyers 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.

We would also like to see announcements to enhance ease of doing business for the developers to create an overall positive climate for real estate investment. We also seek strategic fiscal measures stimulating demand for homebuyers and developers, addressing liquidity concerns, and simplifying regulations. These initiatives would not only drive growth in the real estate sector but also stimulate demand around 250 ancillary industries, thereby boosting job creation across these sectors. Overall, we hope to see policy measures that foster sustainable growth and address key challenges facing the industry in the upcoming budget.

Ramani Sastri – Chairman & MD, Sterling Developers Pvt. Ltd