With the Union Budget 2023-24 round the corner, the realty sector is hoping for incentives and benefits that will make it easier to run their businesses. Even though the sector had a decent run in 2022, overcoming the pandemic-induced rough time of the previous years, there are many critical demands that it has put forward ahead of the Budget presentation scheduled for February 1.
Strong healthy consumer demand is the crucial driver of the sector's growth today. The Budget should reflect upon the aspirations of developers, who are still tiding over the turbulence caused by the pandemic.
The real estate sector is one of the largest employers of both skilled and unskilled labour. Though it has come out of the challenging impact of Covid, the availability of affordable home loans and the importance of owning a home remain the growth drivers of the sector.
Hitting the right chords, Amit Modi, President, CREDAI (Western UP), points out "One of the most crucial demands is to accord industry status to real estate sector, which will allow it to avail legitimate finances and low-cost loans from banks and other financial institutions. The cost benefits could then be transferred to the end users and homebuyers. For the benefit of homebuyers, the input credit regime should be reinstated in the GST regime, at least for residential real estate. This will help in making home-buying an affordable and buyer-friendly process."
Meanwhile, Finance Minister Nirmala Sitharaman should facilitate a single window clearance to enable faster deliveries. Lest one forgets, project completion is an old demand of realty sector. In an effort to provide ease of doing business in realty sector, there should be some significant changes in the principal repayment of housing loans. To boost the housing markets and bolster realtors' confidence, the deduction for principal repayment of housing loans should be increased from the existing limit of Rs 1.50 lakh. This will allow homebuyers, who had an askance attitude towards investing in homes due to high mortgage rates, to make a return.
Real estate contributes 6-8 per cent to the GDP and employs more than five crore people. It has high hopes from the forthcoming budget. To begin with, there should be a separate deduction for principal repayment as it is currently clubbed under section 80(c). It should be raised from the existing Rs. 1.50 lakh.
According to Manoj Gaur, CMD Gaurs Group, "There is also a need to redefine affordable housing from the current ceiling of 45 lakh in urban and 30 lakh in non-urban to take into account the inflationary factors. Further, the carpet area should also be increased to 90 sqm in metros and 120 sqm in non-metro cities without any price cap. Long-term capital gains on capital assets should also be taxed at 10 per cent. The holding period should be reduced to 12 months in line with the holding period of other capital assets like listed equity shares and equity-oriented mutual funds."
The sector also hopes the FM will extend exemption under Section 80C to REIT investments starting with Rs. 50,000. The period of holding for units of REIT should be reduced to 12 months (as applicable for listed shares) to qualify as a long-term capital asset from the current three years. The deduction under Section 24 (b) on housing loan interest in the case of individuals with respect to the first self-occupied property should be allowed without any limit or at least capped at Rs five lakh in respect of self-occupied property. A single window clearance system should also be introduced in real estate as taking approvals from numerous authorities disproportionately increases the cost and time from concept to commissioning. The rising input costs, specifically cement and steel, should also be controlled. More importantly, an industry status should be conferred on real estate.
Nayan Raheja, Raheja Developers, opines that "The ministry should take stock of the insolvency debts of realtors and delays in project deliveries. The ensuing Budget should introduce tax remissions on the interest rates of home loans levied by banks, which have been triggered by an all-time high inflation rate in the previous quarters. This will provide relaxation to developers and simultaneously expedite construction activity in ongoing projects."
"The most crucial demand is to give tax relief to developers to expedite the completion of stalled projects and take a compassionate recourse in times of difficulties. The recurrent demand has been bestowing industry status to the real estate sector," feels Aman Sharma, Director of Spaze Group.
"Reducing GST rates and stamp duty will allow the real estate sector to adopt a policy of moderation in pricing of housing units and apartments and give real estate a breather from increasing cost valuation of projects," says Kushagr Ansal, Director of Ansal Housing.
The realty sector has made a smooth transition from the pandemic-induced turbulences. We believe the sector should be further stabilised by way of introduction of profound measures in the Union Budget.
Says Amit Jain, Director, Mahagun Group, "Reductions in GST, circle rates and stamp duty would be significant fresh-start policies allowing the housing sector to gain an upper-hand advantage right at the year's outset."
The Budget should mirror the aspirations of the realty sector and support growth-inducing factors. GST rates on construction materials like steel, cement and tiles should be rationalised, keeping in view the overall health of the sector.
According to Deepak Kapoor, Director, Gulshan Group, "The Centre should help distressed developers and allocate funds for completion of projects that are stuck. The current stand of RBI on the repo rate should also take into account the views of developers. The Budget should offer a premise of agents of development and progress and stamp out hindrances impeding the growth of the sector."
One hopes that Nirmala Sitharaman will look into the interests of the realty world on a more liberal note.
(The author is Delhi-based senior journalist and writer. He is author of Gandhi's Delhi which has brought to the forth many hidden facts about Mahatma Gandhi)
