From more rebate under Sector 24 of Income Tax Act to measures to improve liquidity, here are the key things real estate players want from Budget 2021
Finance minister Nirmala Sitharaman will present the Union Budget 2021 on 1 February. To revive the ailing real estate sector amid a global pandemic, the analysts expect some big announcements from the Budget 2021. "All through 2020, the government came up with slew of announcement and measures to streamline the sector and to provide liquidity solutions to the stuck projects; the sector now has high hopes from the upcoming budget," said Achal Raina, chief operating officer, Raheja Developers. "It is expected that the government will take last year’s thought and action forward to come up with the announcements that can be implemented in the short term," he further added.
From rationalising the existing income tax structure to measures to improve liquidity, here are the key things real estate players want from Budget 2021
More rebate on home loan interest rate under Section 24
To boost consumption, the real estate developers want rationalisation of existing income tax structure. A simplified tax regime can put more money in taxpayer's hand and push the economic activities forward in the coming months.
Under the Section 24 of the Income Tax Act, the homebuyers are eligible for a rebate of up to ₹2 lakh on home loan interest, if the owners reside in the property. "The centre should hike the rebate on housing loan interest rates to at least ₹5 lakh to generate healthier housing demand, most notably in affordable and mid-segment housing," said Anuj Puri, chairman, ANAROCK Property Consultants.
GST discount for developers
Coronavirus pandemic has severely affected real estate sector. The demand for real estate properties has been subdued for several months in 2020. The central government has brought several measures to clear the unsold inventory. Now, the developers want a waiver in Goods and Services Tax (GST) for a limited period of time.
"The sector would receive a big impetus if stamp duty and registration charges are subsumed within the GST and income tax exemption limit for home buyers in raised. These initiatives will help in sustain the improvement in sentiments which was witnessed in the last three months of 2020," said Dhruv Agarwala, group chief executive officer, Housing.com, Makaan.com, and Proptiger.com.
"The industry expects if 1% GST for affordable housing can be extended for another fiscal year along with the removal of ₹45 lakh cap to push the affordable housing segment," said Ashok Mohanani, president, NAREDCO Maharashtra.
A rational capital flow
The liquidity crunch has a cascading impact across sectors, including real estate. Project delays — the biggest fallout of the cash crunch — had severely dampened buyer sentiments in last two years, said expert. "Developers need a rational capital flow to keep up the supply pipeline, especially for ready-to-move-in homes which are in highest demand - healthy. Increased supply also helps to keep property prices range bound," said Anuj Puri, chairman, ANAROCK Property Consultants.
The single window clearance for projects is a long pending demand of the real estate sector. This issue affects the delivery timelines of projects. "Authorities should also be brought under the purview of RERA since delays on their part in granting permissions impacts project completion and delivery, thereby causing major financial losses for builders and heartburn among home buyers," said Dhruv Agarwala.
"Another requirement would be a further enhancement in Ease of doing business with limited approvals required to develop a project within a defined timeframe," said Krish Raveshia, chief executive officer at Azlo Realty.
More private investments in affordable housing
"Despite the benefit of infrastructure status for this critically important segment, developers are unable to get funding from major banks and NBFCs at affordable cost," explained Puri.
"India’s urban population is expected to grow to 590 million by 2030 and massive effort and investment in urban rejuvenation will be needed including from the private sector. The government must encourage private sector investment in state capitals and tier 2 and tier 3 cities by opening avenues and providing tax breaks and incentivise in areas like real estate, IT, BPOs, retail, banks etc," said Mohit Goel, chief executive officer, Omaxe Limited.
"Lastly, the finance minster should extend the current schemes to avail benefits under PMAY CLSS beyond March 2021, and differential pricing between circle rate and agreement value beyond June 2021, steps which will boost demand for real estate and help achieve a faster recovery," Krish Raveshia of Azlo Realty concluded.
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