Union Budget 2024: Key Expectations of the Real Estate Sector, by the Real Estate Players, & For the Real Estate Customers

Exclusion in Taxes

One of the major expectations from the real estate sector towards the step towards enhancing the affordability and accessibility is Tax Exemption. This can be achieved by increasing the limits of tax exemption on both the principal and interest compensated on the home loans. Furthermore, offering tax incentives for housing developers and dealers specialized in the affordable housing segment could definitely spice-up the supply to cater the emerging housing demands in urban as well as rural areas. According to section 80IBA, reintroducing the 100 percent holiday for real estate tax is also recommended by experts in the sector. After noticing the government’s dedication for building global level infrastructure in India is expected to gain major attraction from foreign investors and NRIs to put sources in ultra-luxurious properties.

Speaking on this, Sandeep Runwal, Managing Director, Runwal says, “To further boost investment, we suggest reducing long-term capital gains taxes on property and streamlining REITs coupled with increasing the limit of interest rebate for housing loans. Further, the implementation of modern regulatory framework and the Urban Governance Curriculum will positively impact the real estate sector. The substantial growth of the real estate sector requires increased manpower. Hence, the other suggestion includes further investments in up-skilling to ensure seamless and on-time delivery while maintaining the quality standards of the projects”.

Highlighting about the growth of real estate in Tier-II cities, Vijay Harsh Jha, Founder & CEO, VS Realtors (I) Pvt. Ltd. mentioned, “As a result of massive infrastructure development and connectivity across India, Tier-II markets and peripheries of metro/Tier-I cities have witnessed strong demand for residential spaces. Not just the price of new launch projects but also prices in the secondary market have seen a steep rise in the last few years. Going forward, several cities will witness availability of high-paying jobs which in turn may force job-seekers to move back to their hometown”.

Yashank Wason, Managing Director, Royal Green Realty told, “In the last 5 fiscal years, the launch price of residential properties prices has witnessed a rise of up to 94% in Tier-II cities. This is a function of the rising demand of Tier-II cities by homebuyers, and reflects an evolving trend of Tier-II cities growing in prominence in the real estate market. With hyper-congestion and dwindling quality housing supply in Tier-I cities, the next generation of homebuyers is increasingly looking towards Tier-II cities that align with a modern urban lifestyle.

Eliminating Liquidity Issues

As the lack of liquidity in the real estate sector, especially in the housing segment is continuously affecting the development, the real estate experts are request industry as well as increase the revenue collection to the government. The salary upper limit of 25k could be enhanced to 40k and timeline from 3 yrs to 5 yrs to enable start-ups/coworking entities to enjoy the benefit of sec 80JJAA as these industries are generating a greater volume of employment. Input tax credit under GST is an important issue that concerns the coworking sector. We expect the budget would enable coworking firms to claim input credit on work contracts and construction services supplied so that it is passed on to companies who lease out space for coworking and thereby reduce their overall costs.

There are few other aspects that need attention. Typically stamp and registration duties are high and since both the landlord as well as client agreements are subject to these charges, hence, either concession in such stamp duty rates or allowing twice the duty paid as expenditure under income tax will encourage even the small agreements to get registered. An important requirement for the coworking industry has been Lower/Concessional rate of TDS which will improve the working capital. Another measure that could be announced to intensify growth of the coworking sector is a further and continued extension of tax holiday for start-ups as they would be motivated to scale up their business and enhance investment.

We also believe that a significant push to infrastructure and a single-window clearance system will help in faster establishment of coworking spaces in non-metro cities as well. Overall, the coworking sector is expecting continued improvement in the ease of doing business which will play an important role in the growth of the coworking industry in the near future. Going forward, we hope that the government looks at addressing regulatory concerns and encouraging more coworking firms to open-up through a series of both financial and non-financial incentives and ensure faster economic growth.

As we move forward, the demand for coworking spaces is only set to witness greater traction from companies across segments.g the government to implement certain measures such as easing the norms of financing for accessing home loans for homebuyers and commercial loans for developers to make the circulation of credit more obtainable and creating a committed funds to offer long-term and short-term home loans for realtors struggling with liquidity crunches to ensure the projects to be completed on time. They also suggest introducing subsidies for home loans particularly for affordable housing units to transform the borrowing process easier for homebuyers and encourage public-private-partnerships – PPP models for larger- scale homes to enhance the project execution and liquidity by sharing the risks and resources.

Prashant Sharma, President, NAREDCO Maharashtra: “We expect the budget to introduce measures that ensure easier access to financing for developers, especially Small and Medium-Sized Enterprises (SMEs). Enhancing the flow of money through banking and non-banking financial institutions is essential for sustaining project momentum. Also, there’s a need for an increase in the SWAMIH stress fund and the creation of a second tranche with a corpus of Rs.50, 000 cr, aimed at completing stalled realty projects and ensuring adequate liquidity”.

The real estate sector is expecting a possible reduction in GST rates and measures to stabilize the costs of materials. These actions could have a significant positive effect on developers and homebuyers. There is a huge possibility of reduction of tax, which will reduce the price of the property.

Founder & CEO of PropEquity, Samir Jasuja, highlighted saying, “Significant transformation and radical changes within the real estate sector is necessary to achieve a fivefold increase in India’s Economy and contribute to transition from a $250 billion to a $1 trillion economy.”

He explained that to achieve $1 trillion real estate economy a series of radical reforms have to be taken in order to achieve the desired target: Removal of Capital Gain tax on real estate: Removing capital gains tax on real estate would eliminate the tax paid on profits from selling property. This could boost real estate transactions, increase liquidity, and potentially lower housing costs.