Budget 2024-25: Key Expectations for the Indian Real Estate Sector
Introduction
The Indian real estate sector plays a pivotal role in driving economic growth, employment generation, and infrastructure development. With the upcoming budget for 2024-25, there are high expectations from the government to address the challenges faced by the real estate industry and provide a conducive environment for its sustainable growth. In this blog, we will discuss three key expectations for the Indian real estate sector in the upcoming budget, focusing on policy reforms, tax incentives, and infrastructure development.
1. Encouraging Affordable Housing Segment
The budget should address the matter of affordable housing by offering incentives to developers and homebuyers. This could include increasing the scope of affordable housing, providing tax breaks to developers focused on affordable housing projects, and introducing subsidies for first-time homebuyers. These policy reforms will not only stimulate demand but also incentivize the supply of affordable housing, addressing the housing shortage in the country.
The Govt. budget for 2024-2025 should carefully examine the affordable residential real estate market in India. In the real estate market's early growth phase, the sector experienced a decrease in sales amid the pandemic. At present, it only constitutes 20% of the overall property sales, which is a notable contrast to the period before the pandemic, where it made up 40% of the sales. Government agencies must play a vital role in facilitating the recovery of the sector by implementing carefully designed policy measures, providing tax benefits, and offering financial assistance. This is crucial as the sector holds the key to addressing the growing housing disparity.
2. Reviving Tax Incentives and Increasing Interest Rate Rebate
Experts suggest that to boost the housing market, it is essential to raise the home loan interest rate rebate provided by Section 24 of the Income Tax Act from ₹2 lakhs to a minimum of ₹5 lakhs. This will draw in sincere individuals looking to purchase a home and enhance the level of demand. Similarly, it should also consider analyzing additional factors like decreasing the repo rates, providing tax breaks to developers, and exploring alternative methods of financing projects. Taxation policies play a significant role in shaping the current scenario of real estate in India. In the upcoming budget, the government should consider introducing tax incentives to encourage investment in the real estate sector.
It is crucial to revive expired incentives, such as tax breaks, to ensure affordable housing. Revise the requirements for eligibility by taking into account the Ministry's definition which involves factors such as income, size of property, and price. Modify the minimum cost required for city properties. This guarantees wider access and usage of government subsidies and lower GST rates in the Indian commercial real estate market. One key expectation is that the government should explore the possibility of providing tax benefits for real estate developers investing in infrastructure projects, such as affordable housing, logistics parks, and warehousing facilities.
For prospective homebuyers, the budget should consider providing additional income tax deductions on home loan interest payments and principal repayment, thus making homeownership more financially viable. These tax incentives will not only drive investment but also promote homeownership, contributing to the overall economic growth in the future of Indian real estate.
3. Giving Industry Status to Real Estate
In order to strengthen Indian real estate, the government should contemplate bestowing industry status upon it, along with facilitating streamlined approval processes, offering tax exemptions, and ensuring appropriate rationalization of the Goods and Services Tax (GST) in the upcoming budget. Other related industries will also experience positive effects from these measures. The real estate sector in India has experienced consistent growth, and the government needs to provide policy encouragement and assistance to stimulate more purchasing activity in the industry. The industry plays a crucial part in the economy and makes up approximately 8% of the GDP. After the agricultural industry, it is the second largest creator of jobs, and over 200 related industries depend on it as well.
Therefore, it is necessary for the government to proactively implement measures to increase demand, streamline costs, and alleviate regulatory obstacles. As per the budget 2024-25 expectations, the authorities in charge must consider granting industry status to the real estate sector, which has been overdue for a long time. Additionally, they should also consider the implementation of a simplified approval process, providing tax incentives, and streamlining the Goods and Services Tax (GST) to support this industry. The benefits of this would extend beyond just the real estate industry and have a positive ripple effect on other related industries.
Conclusion
In conclusion, the Indian real estate sector has a pivotal role in driving economic growth and development. In the upcoming budget for 2024-25, the government should address the key expectations of the real estate sector by implementing policy reforms to boost demand and supply, providing tax incentives for real estate development and investment, and prioritizing infrastructure development for seamless urbanization. Gurugram is one of the best real estate market in India and by aligning with these expectations, the budget can pave the way for a vibrant and sustainable real estate ecosystem that contributes significantly to India's economic progress. The government must work towards creating an environment that fosters growth, innovation, and inclusiveness in the real estate sector, thereby positioning India as a global real estate destination.
