As the Union Budget 2019 is around the corner, there is a fresh lease of hope in the real estate sector from the Narendra Modi-led National Democratic Alliance government. In the last five years, the real estate sector in India has undergone a massive makeover.
In the last five years, the Indian real estate sector has been extremely transparent and buyer-friendly because of the implementation of stern policies and reforms by the government in its first term. The Modi government had implemented major reforms such as Goods and Services Tax (GST), Real Estate (Regulation and Development) Act, Benami Transactions (Prohibition) Act and Insolvency and Bankruptcy Code in order to support the real estate sector struggling with declining sales, unsold inventory and price stagnation.
Now, as the Modi 2.0 government is all set to present their first budget on July 5, the expectations from the real estate sector are quite high. There are expectations from the real estate fraternity that the current government will continue with reforms and boost growth in the sector. Being one of the major contributors to the GDP growth, here are some of the key expectations of the real estate industry from the upcoming budget:
Re-finance NBFCs:
The real estate sector is facing severe liquidity crunch, which is deterring a smooth and steady growth for this sector. For this, the government should take proactive measures to create sufficient liquidity in the sector. The real estate sector is expecting that the Government could possibly increase the limit of financial funding for NBFCs a major source of funding for developers as the chocking liquidity is contributing significantly to project delays.
Boost affordable housing
While the government has taken several noteworthy steps towards affordable housing segment in the country, many are expecting a continuation with favourable initiatives in this year’s budget as well. The government should increase the threshold value of affordable housing from Rs 45 lakh to Rs 75 lakh. By doing this, the Government will bring several realty projects under the purview of ‘affordable housing’. This will allow a wider segment of the real estate market to avail the income tax benefits.
Expansion of infrastructure
The government has to come out with a roadmap for infrastructure and housing development, in the peripheral locations and tier-2 and tier-3 cities. A boost for infrastructure, will not only boost the real estate sector but also help other industries and generate more employment.
More tax benefits:
While the interim budget in February, the government had announced a few incentives to woo back investors and buyers, but the industry needs more direct benefits. The deduction limit under Section 80C should be increased from the current INR 1.5 lakh a year. The deduction limit under Section 80C was last increased in 2014, thus, people are expecting that the government might consider revising it now. This will increase the number of potential buyers as it will boost buying confidence among them and revive the sector.
Bring in more investments
In line with their expectations from the upcoming budget, the government should come up with some incentives that will attract more foreign investments into the Indian real estate.