Budget 2024: Real estate sector wishlist — from single-window approval for construction to tax benefits

Union Finance Minister Nirmala Sitharaman will present the Budget for 2024-25 in the third week of July, outlining anticipated government receipts and expenditures across various sectors. 

India's real estate industry eagerly awaits reforms and incentives to foster growth and address long-standing challenges. 

Expectations range from extending corporate tax benefits to surcharge withdrawal and much more. Here is a wish list of real-estate stakeholders for the upcoming budget:

NAREDCO Chairman Niranjan Hiranandani emphasized the need to extend corporate tax benefits to all, withdraw surcharges, and comprehensively revise tax policies.

• Increasing the limit of interest deduction paid on home loans from 2 lacs to 5 lacs, bringing long-term capital gains at 10 per cent on par with equity shares.
• Reducing the period of holding house property to 12 months from the existing 24/36 months to qualify as a long-term Capital asset.
• The dividend taxation rate for resident investors may be kept at 10% to avoid discrimination between resident and non-resident investors.

• Corporate tax benefits granted to manufacturing companies must be extended to all entities, such as firms, LLPs, and Individuals, to bring uniformity.
• A surcharge introduced as a temporary measure should be withdrawn with buoyancy in tax collection.
• Extending the benefit of the Alternate tax rate at 15% for infrastructure and housing projects will help attract more investment and bolster developmental activity.
• The taxability of converting stock in trade into a capital asset should be deferred to the year of the actual sale of the capital asset to ensure better cash flow availability for tax payments.

National President of NAREDCO, G Hari Babu, suggested prioritising affordable and sustainable housing initiatives.

• The finance ministry should allocate ₹50,000 crore to the second tranche of the Special Window for Affordable and Mid-Income Housing (SWAMIH) fund in the upcoming union budget for FY 2024-2025.
• This should be accompanied by other budgetary support and relaxations, including allowing input tax credit under GST and incentives for rental housing to achieve the housing for all targets.
• Municipal charges paid to the local authority should be outside the purview of GST.

Arun Awasthy, President and Managing Director at Johnson Controls India, said, “We are optimistic that the upcoming Union Budget, building on the New Green Deal, will drive focus towards strengthening the energy efficiency of India’s building infrastructure.”

Awasthy said provisions must be made to bolster the skilling and innovation initiatives related to green technology to bridge existing gaps.

•  We hope for tax incentives and infrastructure upgrades to improve urban living and boost growth in emerging areas.
• Granting 'industry status' to the housing sector could incentivise growth and attract significant investment.
• Introducing a single-window approval system for real estate construction would also streamline processes, reduce delays, and boost efficiency across the sector.
• The EPC sector in India needs more investments and clearer regulations to thrive.
• New tax rules can help EPC firms overcome challenges and innovate.

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Heeralal Doshi, Founder and Chairman at Kinjal, stressed the necessity of expanding tax incentives for homebuyers and investors, reducing GST rates for real estate, and adjusting raw material pricing to enhance affordability and demand.

• There is an express need for more tax sops for homebuyers and investors.
• The government should raise the deduction limit for interest payments on home loans from the existing ₹2 lakh a year to ₹5 lakh, which would 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. Hence, the definition of affordable housing should also be expanded, as this would expand the benefits for homebuyers and boost the end-user demand.
• Any tax exemption from rental income will also encourage greater investment in residential real estate.

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• 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 through lower tax rates or by readjusting tax slabs, which is the need of the hour.