Budget 2023: What the real estate sector expects from FM Nirmala Sitharaman

The Indian real estate sector has weathered the pandemicinduced strong headwinds and has done considerably well last year with the growth outlook for 2023 projected to be firm Ahead of the Budget 2023 the real estate sector in India is looking for reforms and incentives from Finance Minister Nirmala Sitharaman in the upcoming Union Budget 2023India Inc has already started pinning hopes on various economic reforms in the upcoming Union Budget 202324 Unavoidably there is quite a bit of overlap with previous years in the form of recurring demands which have so far not been or insufficiently met Anuj Puri Chairman of ANAROCK Group saidThe demands for singlewindow clearance and industry status for real estate are among the recurrent ones and have yet to be addressed The sector hopes the forthcoming budget will finally address it The government must offer more incentives to boost affordable housing To a noticeable extent the pandemic derailed the affordable housing growth story since early 2020 ndash one segment that the current government has rightly stressed since taking charge in 2014 The affordable housing supply by private players has reduced significantly since Covid19 largely because its buyer class was impacted economically and hence went into waitandwatch mode Now there is a need to make this segment attractive again not least of all because it resonates well with the governmentrsquos housing for all initiative he addedPuri further expressed a need for more tax sops for homebuyers as well as investors The Rs 2 lakh tax rebate on housing loan interest under Section 24 of the Income Tax Act needs to be hiked to at least Rs 5 lakh This will add momentum to housing demand particularly in the affordable segmentAlso Read Budget 2023 Gold industry wants FM Sitharaman to reduce import duty bring more transparency to sectorThe Budget should offer a degree of personal tax relief either by ways of lower tax rates or by readjusting tax slabs Doing so would also help boost housing absorption The last increase in the deduction limit under Section 80C to INR 15 lakh a year was in 2014 Another favourable revision is long overdue though it is admittedly unlikely Instead we may see the Budget further incentivising MSMEs and SMEs that are still struggling post the pandemic he addedPuri also urged Finance Minister Nirmala Sitharaman to consider revising the price bandwidths for homes to qualify as affordable housing Perhaps most importantly the government should seriously consider revising the price bandwidths for homes to qualify as affordable housing to align with the market dynamics of different cities The size of units as per the current definition 60 sq m carpet area is fairly appropriate but the catchall pricing band of up to Rs 45 lakh for affordable housing is definitely not appropriate across most cities he saidFor instance a price band of Rs 45 lakh or below is far too low in a city like Mumbai where it should be increased to Rs 85 lakh or more In other major cities the qualifying price band should be increased to Rs 6065 lakh Such a move would have more homes qualifying as affordable housing and many more homebuyers would be able to avail the current benefits like reduced GST at 137 without ITC and other government subsidies Puri explainedAhead of Budget 2023 Dr Niranjan Hiranandani Vice chairman of Naredco recommended an increase in standard deduction in Rental housing up to 50 per cent and incentivise service rental apartments by allowing accelerated depreciationIn order to accomplish the goal of housing for all real estate developers should be encouraged to create surplus rental housing with tax incentivization The industry recommends an increase in standard deduction in rental housing by up to 50 per cent and incentivise service rental apartments by allowing accelerated depreciation Also tax on notional income from house property held as stock in trade needs to be waived off completely to boost real estate investment In addition the cap on affordable housing should be capped up to Rs1 cr in metro cities as a broader spectrum of homebuyers can avail the benefit of CLSS scheme as industry witnessed the growth of firsttime homebuyers postpandemic he saidAlso Read Budget 2023 What healthcare sector and hospitals expect from FM Nirmala SitharamanHiranandani additionally emphasised on granting infrastructure status to avail long term cheap funding as this interest rate sensitive sector is grappling with inflation led high cost of credit borrowings This will help developers to build and deliver housing projects at an affordable costMeanwhile Vimal Agarwal Chief Financial Officer of Mahindra Lifespaces said that the government should increase the rebate on housing loans to Rs 5 lakhs from the current Rs 2 lakhs under Section 24 of the income tax actThe Indian real estate sector despite headwinds on account of high inflation and interest has proved its resilience by demonstrating significant growth over the last two years This traction has been promising for the countrys economy by pulling up the performance of various associated sectors as well Furthermore with a surge in construction and development and a rise in FDI inflows the sector is expected to perform well However certain changes could be implemented to further accelerate the growth of the Indian real estate market he saidAgarwal further added In the forthcoming budget we expect the government to increase the rebate on housing loans to Rs 5 lakh from the current Rs 2 lakh under Section 24 of the income tax act We believe this move will boost home buying sentiments by providing muchneeded incentives and further adding momentum to housing demandMoreover the government should consider incentives to support affordable housing redefining the ticket price of affordable housing as per cities In metros such as Mumbai the price cap of Rs 45 lakh should be increased to at least Rs 75 lakh while in other cities it should be extended up to Rs 60 lakh With these price revisions more homebuyers can avail the benefits of government subsidies lower GST rates and tax deduction benefits on home loans he signed off