The real estate sector in India continues to show resilience with sales returning to almost 90% of pre-COVID levels in a few cities. The realty sector seeks aid from the government to avoid derailing growth this year. The real estate sector welcomed the government’s decision to allocate Rs 48,000 crore in Budget under the Pradhan Mantri Awas Yojana (PMAY) and faster approvals for affordable housing in urban areas but homebuyers expressed unhappiness over the absence of any additional tax deduction on interest paid on home loans or relief for buyers stuck with incomplete projects. The real estate sector has seen significant growth despite the recent waves of the omicron virus. The sector expected a special budget for real estate business from the government. Here are some major highlights from the real estate budget 2023 in the Union Budget.
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Reduced Interest Rates
The RBI and the central government have tried proactively to aid the sector with helpful demand boosters in the past. The cuts in stamp duty, extensions on tax benefits on affordable housing in last year’s real estate budget were significant and much-needed moves that helped made a difference for the sector. Industry experts expect a strong budget for real estate businesses to help aid robust demand in the home-buying section. Home buying is a priority category for the segment and the budget realty boost can help the real estate sector significantly.
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Currently, the income tax act allows interest rates on home loans to be in the range of 6.5%-7% per annum. However, for home loan applicants looking to avail of a loan of over 30 lakh, it’s a restricting move as they can’t claim any deductions against the total interest that has been paid in the initial years. This is due to section 24(b) of the Act which sets a cap of Rs 2 lakh per annum against the interest rate on home loans.
The sector expects if the government pays attention to this and introduces aid in the upcoming real estate budget 2023. Increasing the tax rebate on the interest rate will be a welcome move. The real estate industry is hopeful that the tax rebate on the interest rate will be increased to at least Rs 5 Lakh from the current Rs. 2 Lakh.
Read: Old Vs New Tax Regime: Tax Slabs, Exemptions and Deductions
Streamline GST
The real estate industry feels that the government’s current Goods and Services Tax, applicable at 1% for affordable homes and 5% for other segments should be revamped considering the financial implications of the coronavirus pandemic. For instance, a reduction in GST for under-construction projects to 1% will help in the completion of projects that have been stopped due to the financial limitations of the developer.
The current tax benefits for affordable housing in budget real estate is included for projects approved up to March 31, 2023. The timeline for completing these projects is set for 5 years. This can be increased to 7 years considering the stall during the past two years. Streamlining the GST on raw materials will also help the sector recover quickly from the global supply shortage.
Reduction in Stamp Duty
Earlier instances have proved that reducing stamp duty has helped the real estate sector get a significant boost with property registrations getting easier. The industry is hopeful that the budget 2023 on real estate will bring out more such incentives and benefits. A model similar to Maharashtra or Delhi can be followed here, where the state government achieved the much-needed boost during the coronavirus lockdowns with cuts in stamp duty. The sector is in dire need of a budget realty boost with such policies.
Redefine Affordable Housing Option for Everyone
Homes by Budget Real Estate Schemes have always been a major attraction for finding a good, affordable housing option. However, most of the ecosystem in India’s real estate has developed over a spurt. Currently, the definition of affordable housing includes the size of a property, its price, and the income of the buyer. The need of the hour is that the government adjusts this definition to a city-specific standard. This will help in faster recovery across the mid-segment housing category. The redefined value should be kept at Rs 75 lakh in non-metro cities and Rs 1.50 crore in metro cities, from the current value of Rs 45 lakh. Increasing the apartment size from 60 sq m and 90 sq m to 90 sq m in metros and 120 sq m in non-metros respectively will also be a major booster.
Read: Escrow Transactions — The Key to Information Symmetry in Indian Realty
However, real estate experts said that a time extension of the credit-linked subsidy scheme would have given affordable and mid-income homebuyers the financial elbow room to make a purchase, adding a standard definition for 60m and 90m affordable homes would have given a bigger boost to the housing industry.
The allotment of Rs. 48,000 crore for completion of 80 lakh houses this year under the PM Awas Yojna will further boost the affordable housing segment. The PMAY scheme has delivered 53.42 lakh households to date. Check here how to apply for Pradhan mantri awas yojana online.
Finance Minister Nirmala Sitharaman on February 1 also said that the Central Government will work with the state governments for reduction of time required for all land and construction-related approvals, for promoting affordable housing for the middle class and Economically Weaker Sections in urban areas.
Award Industry Status
Real Estate is the largest employment sector in the country after agriculture and with 6%, it is a significant contributor to India’s gross domestic product (GDP). The emerging concept of real estate investment trusts (REITs) and the beneficial tax regime introduced to attract investments associated with the segment have proved to be a welcome step for boosting the economy. With so much to offer, the government should declare industry status for the real estate sector. This will help in procuring better financial deals and credit schemes and completion of leftover projects seamlessly.
The real estate budget 2023 will be a much-needed boost to the economy in these testing times. The industry is hopeful of its demands to be heard by the government. With a favourable real estate budget, homes by budget real estate will be introduced in the market. If you are also having the dream of having your own house one day, we can help you find it at the best price possible. Find the property of your dream with NoBroker and save huge with zero brokerage. Comment about your requirements here and our executive team will be in touch with you.
FAQ’s
Q1. When will the Union Budget 2023 be presented?
Ans. Union Budget 2023 will be presented on February 1, 2023
Q2. Who is the Finance Minister of India?
Ans. Nirmala Sitharaman is the Finance Minister of India
Q3. What is the total budget of India?
Ans. The government estimated to spend Rs 34,52,430 crore in 2022-2023.
Q4. What is India’s GDP in 2023?
Ans. The GDP in the year 2022-23 is estimated at ₹ 232.15 lakh crore for India
Q5. Who will present the real estate budget 2023?
Ans. India’s Finance Minister Nirmala Sitharaman will present the real estate budget 2023 as part of her union budget presentation.
Great insights Prakhar! Given that the budget offers the support and incentives that people urgently need, this is a perfect time to invest in the real estate market. Well done on this article.