Real estate developers were expecting the Central Government to provide infrastructure and industry status alike for the sector from the 2021 Union Budget along with expecting an increase in the Rs. 25,000 crore stress fund corpus and added tax sops for builders and homebuyers alike for enhancing real estate demand. They were also hoping for single-window clearance mechanism for realty projects along with other measures for enhancing overall liquidity, lowering of GST rates and input tax credit availability upon GST paid as part of the 2021-22 Budget that was presented on 1st February, 2021.
Experts hoped that the Union Budget 2021 would offer some much-needed relief to the real estate industry since growth here is hugely dependent upon financial measures according to them. Almost all major players agree upon the granting of industry status for real estate along with the single window clearance system for ensuring swifter project completion. Lower registration charges throughout States, a single GST and single or zero stamp duty regime are measures which will certainly make a difference to project costs while encouraging more investments by prospective homebuyers.
Experts also feel that an enhancement of the principal deduction threshold under Section 80C will go a long way towards stimulating demand along with reduction of long-term gains tax on sale of house property and GST rationalization for properties under construction. The Government may also consider scaling up the SWAMIH fund corpus of Rs. 25,000 crore. Expansion of affordable housing till the price point of Rs. 1 crore in Super Tier 1 cities like Delhi and Mumbai will also incentivize home buyers as per experts. Reintroducing the subvention scheme may be considered by the Government along with allowing input tax credit to realtors, particularly those who build for leasing.
Other realtors feel that the Government should establish a regulatory authority for the steel and cement industries with a view towards regulating prices and curbing the rise in costs of construction and cartelization alike. Developers should get incentives for coming up with affordable housing projects as per industry experts while investments up to Rs. 50,000 crore in REITs should have eligibility for tax exemptions as per their views. The Government is also expected to tackle the liquidity crunch in real estate soon. CFO at Square Yards, Piyush Bothra, stated that scaling up the tax rebate of Rs. 2 lakh on home loan interest rates till at least Rs. 5 lakh will greatly energize housing demand. He also added that the Union Finance Minister may consider the long-running demand for granting infrastructure status to the real estate industry.
Several industry experts feel that some more incentives should be given towards end-users who will generate sales and revenues required by developers to recover and survive going forward. Infrastructure status is highly expected by the real estate sector along with a single-window clearance mechanism for resolving bottlenecks and permissions across projects.
Many industry players feel that granting infrastructure status to the industry will have a major impact in boosting ongoing real estate projects while also making them priority areas for lending across Indian financial institutions. Reintroduction of input tax credit is another pressing demand along with reduction of GST to 1% from 5% till 2022 at least. Credit availability should be sufficiently ensured for projects under construction in order to relieve those that have been stalled. This will help them come to a stage of completion swiftly while addressing troubles of home buyers at these projects as well. The real estate sector has been witnessing a pick-up in momentum over the last few months and added positive measures from the Government will certainly help turn the tide in its favor.
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Published Date: January 28, 2021
