During the last 2 years, there was a decline in the real estate sector due to the spread of Covid-19. From realtors to the developer’s everyone faced a hard time.
Now that an upsurge was being expected for the demand of real estate especially of residential homes, the new variant Omicron of Covid-19 has taken its place. Again a decline in the Indian economy can be expected. As the number of cases is increasing, also several restrictions are being imposed by the states.
As the 2022 budget is on its way, supportive action is being expected from the government of India. Relaxation in taxes, reduction in GST are being expected, these relaxations would help in boosting the real estate sector.
Real estate contributes to around 8% of the overall GDP proving to be an essential key factor for the Indian economy.
Currently, up to 2 lakhs in interest paid on house loans may be deducted from income tax. To create a healthy demand in the sector, the amount should be increased from 2 lakhs. Similarly, GST exemptions or discounts on raw materials such as cement and steel should be made available. The cost of raw materials is rising, and lowering the GST rate might help developers save a lot of money.
Under the Pradhan Mantri Awas Yojana-Urban (PMAY-U) 114.06 lakh residences have been sanctioned, 89.36 lakh have been grounded (or foundation stone put), and 52.55 lakh have been built.
According to the Ministry of Housing and Urban Affairs, roughly 9.71 lakh residences have been finished and given to beneficiaries under the PMAY-U in Uttar Pradesh, 6.22 lakh in Gujarat, 5.26 lakh in Maharashtra, and 4.77 lakh in Andhra Pradesh under the PMAY-U.
“We expect this budget to provide policy stepping measures including tax relaxations, the impetus to the affordable housing segment, and the rental property market. Also, a stimulus to the demand generation, job creation, sustainable economic growth and support investment climate in real estate,” said Niranjan Hiranandani, Vice President, NAREDCO.
The new budget will be presented on 1st February 2022 by Union Finance Minister Nirmala Sitharaman.
Few budget recommendations are:
- Raise in home loan interest deduction from 2 lakhs to 5 lakhs for tax rebate
- Tax exemption of Rs 50,000 for investments in REITs
- Extension of Credit Linked Subsidy Scheme (CLSS) from 31st December which is under Pradhan Mantri Awas Yojna
- The holding period to be reduced to 12 months on capital assets at 10%
- Enhancement of affordable housing
- Apartment size to be increased from 60 sq m to 90 sq m in metro cities and 90 sq m to 120 sq m in non-metro cities
- Rs 1.50 crore in metro cities and Rs 75 lakh in non-metro cities from Rs 45 lakh
6. Rescue of stalled housing projects by allowing tax-neutral business consolidation through amalgamation and merger