A reduced GST rate on property would propel prospective home buyers to accelerate their purchase decisions, thereby leading the residential market to pick up pace.
The interim budget to be presented on February 1 holds much significance, especially with this year being the electoral year. While the real estate industry has its expectations from the interim budget, as with the previous union budgets, it remains to be seen whether the budget would lend extensive focus on the industry given other priorities of the government.
There are a host of industry matters that need timely attention from the government in order to accelerate the growth, which has slackened in the past two years owing to several regulatory changes.
While the wish list of the real estate sector has remained almost similar in the past few years, it is pertinent to note that the fulfilment of a long-standing demand – that of allocation of infrastructure status to affordable housing, has only given rise to newer expectations from the government. Promotion of affordable housing has been a key focus area of the government and the previous budget had accordingly announced comprehensive measures to provide an impetus to the sector. Some of the key issues on the wish list for the interim budget for the year are:
Single window clearance – Post the implementation of the RERA reform, there have been improvements observed in approvals and redressals regarding real estate projects, however there still exists a need for a structured single window clearance system to avoid delays in clearance certificates, construction work, possessions, investor complaints etc.
Tax reductions – Another major subject in the wish list is regarding the reduction of 12% GST on under-construction projects. The GST council was expected to bring down the prevailing GST rates on under construction projects in the latest meet, but it has kept them same as of now. A reduced GST rate on property would propel prospective home buyers to accelerate their purchase decisions, thereby leading the residential market to pick up pace. Meanwhile, there are also expectations regarding reduction in income tax slabs as well as higher relief on housing loan rates from the budget.
Stamp duty should be brought under the purview of GST
Incentivise Rental Housing – Promotion of rental housing through tax incentives such as offering to increase the deduction from rental income under Section 24(a) can be provided in the budget. It is also expected that a boost to rental housing through various incentives would eventually lead to promotion of the government’s ‘Housing For All’ scheme.
Increase the limit of interest deduction paid on home loan from Rs 2 lakh to Rs 3 lakh.
Provide further impetus to the development of physical infrastructure in the country which will boost Real Estate.Thus, it is evident that despite this budget being an interim one, the real estate industry has a number of expectations from it. The market is banking on positivity to emanate from the budget in order to create an environment conducive to the growth of the industry, generate new business opportunities and lead the economy to new heights.