With the Union Budget 2021-2022 round the corner everyone wants to know what Nirmala Sitharaman has to announce in her third consecutive Budget.
Here’s what the real estate sector expects from Budget 2021-2022:
- Incentives for private sector investments in affordable housing segment
- Hike the tax rebate on housing loan (under Section 24 of the Income Tax Act) from Rs 2 lakh tax to at least Rs 5 lakh to generate healthy demand for affordable and mid-housing segment
- Reduction of housing loan interest rates to foster demand and sales.
- Restoration of income tax benefit on a second home to benefit home buyers and the real estate sector.
- Personal tax relief either by tax rate reductions or amended tax slabs. The last increase in the deduction limit under Section 80C (to Rs 1.5 lakh a year) was in 2014 and an upward revision is long overdue
- GST waiver for under-construction homes – to push the current lethargic slump in demand for under-construction homes.
- Incentives for private sector investments in affordable housing – presently the developers are unable to get funding from major banks and NBFCs at affordable cost, hence the profit margins for affordable housing projects are extremely low.
- The government needs to push the active NBFCs to extend liquidity to the realty sector and declare that the rental income received from any holiday home-based / tourism centric zones would be free from GST, to give further impetus to the holiday homes segment.
- Ease liquidity – project delays – have severely dampened buyer sentiments in the last two years. Developers need capital flow to keep up the supply pipeline, for ready-to-move-in homes which have the highest demand. Increased supply also helps to keep property prices range bound.
According to Aditya Kushwaha CEO and Director Axis E Corp – one of India’s fastest-growing real estate companies, the solution lies in bestowing ‘Industry Status’ to the Real Estate sector as a whole including Secondary Housing and Holiday Homes. “Currently the same has been conferred only to affordable housing. This is a long-pending demand that is expected to help developers raise funds at lower costs” he says.
Further according to him, “to speed up the vision of ’Housing for All’ and to give a flip-up to struggling real estate sectors across the country, the government should re-visit and do away with the present limit of Rs. 2 Lakhs for Interest on Housing Loan U/s 24(b) of IT Act. It will bring tax relief to buyers and provide a much-needed push to the Industry,” he says.
“We’re hopeful that the upcoming budget will relax income tax norms, offer single-window clearance, and GST reforms,” he adds.