Budget 2024-25 - Renewed Hope For Real Estate Sector Growth

Budget 2024-25 - Renewed Hope For Real Estate Sector Growth

The Union Budget 2024-25 approaches in July, and the real estate sector eagerly anticipates policy changes under the Modi 3.0 regime. Expectations are high for tax reliefs and other measures to boost sentiment and support industry growth. The future trajectory of the sector hinges on robust infrastructure deployment, crucial for enhancing urban living standards and developing emerging areas.

A long-standing demand in the housing sector is the grant of industry status, which could streamline operations and attract more investments. Anuj Puri, Chairman of Anarock Group, highlighted this expectation, noting that such a status could stimulate growth across the housing spectrum.

The housing sector has seen increased sales and new launches in major cities, yet the affordable housing segment faces challenges. Post-pandemic, the share of affordable housing in overall sales has declined significantly. Measures like tax breaks for developers and buyers are seen as imperative to revive this crucial segment.

Reinstating the Credit-linked Subsidy Scheme (CLSS) under the Pradhan Mantri Awas Yojana (PMAY) is critical to incentivizing first-time buyers of affordable homes. This scheme had previously promoted homeownership among Economically Weaker Sections (EWS) and Low-Income Groups (LIG). Experts suggest that the government could also reintroduce the 100% tax holiday benefits under Section 80-IBA of the Finance Act, 2016, to encourage the construction of affordable housing projects.

Adjusting the criteria for defining affordable housing is another crucial step, with current definitions needing updates to reflect city-specific market dynamics. The sector also advocates for rationalizing GST rates on under-construction properties, currently at 12% without input tax credit (ITC). Lowering these rates or reinstating ITC could enhance affordability and boost sales.

Introducing a single-window clearance system for real estate properties is essential to reduce bureaucratic delays and improve the ease of doing business. This system would streamline approvals, accelerate project timelines, and foster investor confidence.

Enhancing tax benefits under Section 24(b) (interest on home loans) and Section 80EEA (additional deduction for first-time buyers) would make homeownership more financially viable. Increasing deduction limits under these sections would incentivize investment in real estate, particularly affordable housing.

Promoting green and sustainable housing through tax incentives and subsidies could encourage environmentally responsible practices in the construction sector. Incentives might include tax rebates for developers using eco-friendly technologies and buyers investing in energy-efficient homes.

Finally, granting infrastructure status to the real estate sector remains a critical demand to facilitate access to cheaper funding and streamline regulatory processes. This status upgrade would enhance project viability and attract greater investments into the sector, Puri added.

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