pre-budget expectations for the real estate sector by Mr. Kaushal Agarwal – Chairman, The Guardians Real Estate Advisory

New Delhi, February 01, 2020: “The expectation of real estate contributing 13-14% to the nation’s GDP by 2025 can materialize if the requisite support to this sector is extended starting this budget. Incentivising customers for purchase of real estate with a 50% reversal of paid GST could go a long way in helping boost demand alongside the much-anticipated change in tax slabs. A slight change in the second-highest tax slab of 20% could impact as much as 27% or 1.47 crore of individual taxpayers.”

Expectations from Budget 2020:

1.  Industry status for the Real Estate sector as a whole, currently the same has been accorded only to affordable housing. This is a long-pending demand and can help developers raise funds at lower costs.
2.  The government needs to push the well-capitalized NBFC’s to extend liquidity to the sector and look at a resolution mechanism for the stressed NBFC’s and banks to enable seamless credit flow for developers and homebuyers.
3. The additional tax benefit for home loan interest announced in the previous budget now takes the tally to 3.5 lacs (Section 24 (b) & 80 EEA) for homes worth 45 lacs circle value. The same needs to be extended for homes costing upto Rs.1 crore to benefit the middle-class families residing in Metro cities.
4. The additional income tax benefit for home loan interest which was announced for home loans sanctioned between Apr 19 – Mar 20 needs to be extended for a minimum of 3 more years.
5. The period of exemption from levy of tax on notional rent, on unsold inventories, needs to be extended to 3 years from 2 after receiving the Occupation Certificate. This is keeping in mind the slow reduction in unsold inventory levels and lackluster demand for real estate assets.
6. The tax rebate on the development of affordable housing needs to be extended further to incentivize the development of affordable housing projects.
7. Extending no tax upto an income of Rs.5 lacs to all taxpayers.
8. Change in the second-highest tax slab of 20% could impact as much as 27% or 1.47 crore of individual taxpayers. This will leave more money in the hands of the taxpayers and increase their home loan EMI appetite.
9. Incentivising customers for purchase of real estate with a 50% reversal of paid GST could go a long way in helping boost demand alongside the much-anticipated change in tax slabs.
10. Increasing the standard deduction to Rs.75000 for salaried professionals will benefit not less than 2.3 crore salaried taxpayers.
11. The government should declare tax free, the rent income received from any one owned house across the country. The same will see the young, new age investor pour money in Real Estate.