Budget 2023-24 Expectation: Government must consider giving infrastructure status to real estate sector this time

As the 2023-24 fiscal year Budget approaches, the Indian real estate sector is anticipating significant support from the government. Despite the difficulties brought on by the pandemic, the sector has become a vital contributor to the economy and is closely linked to the growth of other industries. In recent years, India’s economy has seen strong growth driven by consumer demand, government initiatives to foster manufacturing and efforts to attract foreign investment, despite global uncertainty. The Budget will be presented against the backdrop of India’s mixed economic climate. Positive developments include growth in exports, an expansion of the manufacturing sector, and progress in agriculture. However, there are also potential challenges, primarily arising from various external factors that are slowing economic activity and keeping inflation close to the Reserve Bank of India’s tolerance limit. The government should consider these factors when creating the upcoming Budget, and the real estate sector has some key expectations for it: Boost sector with infra status Industry analysts are optimistic that the real estate sector will receive the highly desired ‘infrastructure’ status, which could bring several advantages such as improved access to financing, more efficient project completion, and greater affordability. Furthermore, it could also lead to an increase in private and foreign investment in the industry. Tax revisions, GST Public anticipation is building up regarding the revision of existing income tax slabs and additional tax benefits that can provide much-sought-after relief to both purchasers and developers. Tax relief for purchasers will give a boost to affordable housing. An increase in Section 80C limits will provide more disposable income for people and thus can encourage higher investments. Redefine affordable housing The definition and understanding of affordable housing need to adapt to the rising cost of raw materials. The government needs to revise the price limits for various cities, as a cap of up to Rs 45 lakhs is quite low for metro cities. By redefining affordable housing in an appropriate manner, homebuyers and developers will also be able to take advantage of benefits such as larger tax deductions and GST exemptions. The Special Window for Affordable and Mid-Income Housing (SWAMIH) Fund, which was established to aid owners of stalled developments, may also receive additional funding from the Budget. This would help complete unfinished projects and rebuild client confidence in the real estate market for properties currently under construction. HRA benefits for house owners Housing Rent Allowance (HRA) is another area where expectations for change are high. This is because, at present, HRA benefits only those who live in rented accommodation and does not extend to those who own houses. Experts agree that the inclusion of both homeowners and renters within HRA will act as an encouragement for more people to buy new homes. This will also ensure that both sections of people, especially the ones paying home loans, also get some measure of relief.   Furthermore, on the policy front, industry watchers are hoping for a solid and dynamic legal framework to be drafted to ensure that investors are effectively protected as trends like fractional ownership of real estate are becoming more prominent in the consumer ecosystem. Privatisation of idle public assets desirable Economic growth in the industrial sector may be aided by private companies creating industrial clusters with support from the central government. Additionally, by monetising underutilised or idle public assets, the government can develop new revenue streams. For instance, the privatisation of railroad stations may fall under this category. Cut in REIT holding tenure for LTCG Reducing the REIT holding time for long-term capital gains from the current three years to one year would give investors more options. This would improve liquidity by making it simpler for them to shift money in and out of their REIT assets. Finally, it should be noted that the real estate industry has great hopes for the upcoming Union Budget 2023–2024 and that various stakeholders are looking for support through a variety of financial and non-financial incentives. It will be interesting to watch how the Budget responds to these expectations. The writer is CEO, Savills India. He tweets @IndiaSavills Views expressed are personal Read all the Latest News, Trending News,  Cricket News, Bollywood News, India News and Entertainment News here. Follow us on Facebook, Twitter and Instagram.