Pre Budget Expectation for the real estate sector 2022 by Ajay Sharma, Managing Director, Valuation Services, Colliers India.

New Delhi, January 15, 2022: “Real estate sector witnessed a period of recovery which is likely to be derailed by the current pandemic wave. Given that the inflation-related risks are likely to shape the monetary policy of the central bank, an increase in US federal bank rates will accentuate the cash outflow from markets and that the period of statutory concessions extended to both buyers, developers and other stakeholders in the market will lapse, the immediate focus will be on how to ensure any resultant shock will be cushioned through fiscal measures thereby providing more cash in hand for all stakeholders. This should be led by extending the tax concessionary benefits pertaining to affordable housing, increasing tax set-off for housing loan interest payment under sections 24, 80EE and specifically increasing the standard deduction which could increase the cash available through savings for taxpayers. These combined with more specific curative measures like long-term capital gains period be reduced for REITs and increase the total deduction available under 80C where the home loan principal repayment deduction is allowed, will increase investment into real estate. Apart from these, the budget should focus on bringing all housing segments under one single GST slab while extending additional benefits to affordable housing to the buyers through tax concessions thereby sustaining the momentum for affordable housing and at the same time increasing growth of other housing segments through GST relief to developers. Though not directly related, the Budget should relook at the capital gains taxation of the profits arising from the transfer of shares (held as an investment) in entities holding immovable assets especially in M&A where sick units with assets are being taken over either from insolvency or SARFESI based resolutions. This could free capital for entities in real estate business which could be reinvested for newer ventures and promote the growth of the sector”