India Budget 2024-25: Real Estate Sector's Wishlist

India Budget 2024-25: Real Estate Sector's Wishlist

As India gears up for the announcement of the 2024-25 budget, the real estate industry eagerly awaits measures that could significantly impact the sector, especially in affordable housing.

In recent years, affordable housing initiatives have driven progress through tax incentives for both developers and homebuyers. However, the consensus among industry experts is that more needs to be done to address persistent challenges.

High land acquisition costs, rising construction expenses, and the need for sustainable development practices continue to pose significant hurdles. From a consumer standpoint, the focus is on enhancing affordability and accessibility to homes.

One of the primary expectations is the reduction of the GST rate on basic construction materials such as cement, currently taxed at 28%. Lowering this rate could decrease overall construction costs, thereby reducing property prices.

Experts also emphasize increasing the deduction limit for home loan interest payments beyond the current ₹2 lakh per annum. This measure could substantially relieve homebuyers struggling with high property prices and rents. With home loan interest rates nearing double-digit figures due to the Reserve Bank of India's (RBI) consistent key interest rate of 6.5% for over a year, the ₹2 lakh limit is viewed as insufficient in the current economic climate.

While the government does not control interest rates, its policies can mitigate some of the burdens on homebuyers. Raising the interest repayment limit as a tax deduction could increase disposable income, benefiting many households.

The post-pandemic resurgence in real estate has highlighted the sector's digitization and adaptability. Looking forward, the budget is expected to introduce reforms that sustain this growth momentum. Initiatives such as incentivizing first-time homebuyers, revisiting stamp duty rates, and reviving the credit-linked subsidy scheme under the Pradhan Mantri Awas Yojana (PMAY) could empower India's burgeoning middle class with greater homeownership opportunities.

Another significant proposal is to grant infrastructure status to the real estate sector, which could facilitate easier access to financing. This change could lead to lower borrowing costs and increased affordability across the housing market.

In essence, the budget's impact on the real estate industry depends on its ability to address these critical consumer-centric issues, potentially making homeownership more attainable for India's expanding middle class.

The pressing question remains - will the new coalition government implement these reforms in the budget on July 23rd? The industry and potential homebuyers alike await the announcement with bated breath, hopeful for policies that will drive growth and accessibility in the real estate sector.

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