Categories: Budget

Real Estate Sector Expectations from Budget 22-23 by Mr. Surendra Hiranandani, Chairman and Managing Director, House of Hiranandani

New Delhi, January 31, 2022: With Finance Minister Nirmala Sitharaman about to present the Union Budget 2022 on February 1, the market is rife with speculations about the upcoming announcements. India’s real estate industry has bounced back strong from a prolonged lull following the Covid-19-induced lockdowns and reduction in sales. 2021 was a better year with the industry experiencing an increase in demand for properties in the second half of the year, and we are expecting this growth momentum to continue this year too.

Our expectations from the budget to continue the real estate momentum are:

Deduction on home loan interest limit:

The existing tax rebate of Rs 2 Lakh on home loan interest payments needs to be hiked to at least Rs 5 Lakh so that it can benefit buyers in affordable and mid-segment category.

Deduction on repayment of the principal amount of Home loan

Payments made towards the principal amount of the home loan are allowed for tax deduction to the extent of Rs 1.5 Lakh. This amount needs to be increased to at least Rs 3 Lakh so that buyers feel encouraged to invest in a home.

Reduction on GST in raw materials: Prices of raw materials such as cement, iron, steel have gone up in the past few months. The sector may have to increase the cost of houses to 10-15% to absorb the additional cost. However, any rise in housing price may not work well in the current pandemic times. Hence, there is a dire need for the government to intervene and bring in some relief for developers in the cost of raw materials through reduction of 50 percent in GST on raw materials.

Increasing scope of affordable housing

There is a need to increase the scope of affordable housing by raising the cap of Rs 45 Lakhs for metros.  This will increase the scope of affordable housing and large number of home-buyers can then benefit from the subsidies available for this segment.

Favourable policies and benefits for green construction:

Another aspect the sector would like the budget to include is a focus on green, sustainable infrastructure projects. Given the worsening environmental conditions worldwide, such projects have become increasingly important and buyers are also showing a preference for healthier living spaces. Developers working on such initiatives are expecting their long-standing requests of additional policies and financial benefits to be met as there are higher costs incurred in building environmental -friendly properties.

Reduction in tax on capital gains: There is a need to reduce the tax of capital gains from sale of property to atleast 10 percent from the existing rate of 20 percent.  This would be in line with the listed securities.

Insurance Coverage for Lease Property Business

An altogether new insurance scheme needs to be devised to cover business loss, caused due to change in law or force majeure. This will be highly crucial in securing the lease-business on the revenue-share basis in the realty sector. It covers a range of business domains including malls, offices, cinema halls, clubs etc. Such businesses are going through frequent disruptions that are way beyond their control and completely extrinsic to their business operations. An insurance scheme can mitigate such losses and help in sustaining business in this sector.

Real Estate as an Industry

A single window clearance has been due for many years now. Additionally, it is an appropriate time to award industry status to the real estate sector so that it can avail cheaper credit facilities from financial institutions.

There is a huge opportunity in real estate that would enable faster economic recovery. Despite the pandemic induced-challenges the sector that contributes 8% to the country’s GDP has acted resilient and home-buying is still top priority for a great majority of people for end use as well as for investment. It is time to capitalise on the sentiment by offering some irresistible benefits which we hope budget 2022 will incorporate.

Corporate Comm India (CCI Newswire)
The Property Times News Bureau

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