The announcement of the Union Budget 2021-22 on February 1 resulted in mixed reactions of the experts from various sectors. With businesses going through loss and uncertainty created by the pandemic, everybody's hope laid on this year's budget.
With a list of expectations, the real estate sector was long-waiting for the government's support to streamline its work and help recover from losses incurred during the pandemic. INR 54,581 Crores was allocated to the Ministry of Housing and Urban Affairs in the Union Budget 2021-22.
Finance Minister Smt. Nirmala Sitharaman in her budget presentation for the real estate sector prioritised affordable housing, provisions for construction workers, tax deduction on home loan interest, to name a few.
Hits of Union Budget 2021 for real estate
Ensuring to fulfill the vision of providing a house for all the citizens, Smt. Nirmala Sitharaman said, "This government sees 'housing for all' and affordable housing as priority areas. In the July 2019 Budget, I provided an additional deduction of interest, amounting to Rs 1.5 lakh, for a loan taken to purchase an affordable house. I propose to extend the eligibility of this deduction by one more year, to March 31 2022. The additional deduction of Rs 1.5 lakh shall therefore be available for loans taken up till March 31, 2022, for the purchase of an affordable house".
Applauding this move of the government, Mr. Pradeep Aggarwal, Chairman of National Council on Affordable Housing, ASSOCHAM said, “The incentives will lead to an increase in buyers for affordable housing. The demand for affordable housing is at an all-time high, and we will focus on fulfilling it. The focus of the government on infrastructural development and MSMEs will lead to job creation, which will help people get financially stable. Looking at the experience of people in last one year, affordable housing will get more buyers as people want to secure their lives by owning a home”.
The Director of Mahagun Group, Mr. Dhiraj Jain too welcomed the government's measures and said that the extension of deduction of the home loan interest will definitely do wonders for the sector.
"While the country's economy is still in its recovery phase, the Union Budget 2021-22 has given much-needed hope to the real estate and other sectors. The announcement of a tax holiday for one more year i.e. till March 31, 2022 in the affordable housing segment will help fulfill the government's vision of 'housing for all'. Push towards national infrastructure will directly benefit the sector. It was also heartening to learn about the provisions made for construction workers." - stated by Mr Rohit Malik, CEO, Clicbrics.
Seeing such high importance given to the affordable housing segment by the government, more developers are likely to enter this segment in the coming days. Another major problem addressed by the Finance Minister was the industry's rental housing solution for migrant workers. The proposal allows tax exemption for notified ‘Affordable Rental Housing Projects’ that will further help the migrant worker population to stay in cities where they work during financial hardships.
While supporting this initiative, Mr. Ashok Gupta, CMD, Ajnara India said, "This will give a shot in the arm of the real estate developers, especially those who are engaged in providing affordable housing options for the people. This measure was introduced by the finance minister in July 2019 and has already determined its ability to be a game-changer in the affordable homes market. His move to exempt notified affordable rental projects from taxes is also a “welcome step” in the backdrop of a number of migrant workers finding it difficult to find a home for themselves within their budget".
Misses of Union Budget 2021 for real estate
A few industry experts have expressed their disappointment on certain points that were neglected by the government in its Union Budget 2021-22 announcement.
Mr. Kapil Kapur, Director, sales, strategy and business development, Bullmen Realty said, "The government could have done more to alleviate some of the pandemic-inflicted pains for the industry, which is unfortunately missing. The pandemic has dealt a heavy blow to the industry and any short-term easy financing solution for the developers could have made the deal sweeter".
Mr. Achal Raina, COO, Raheja Developers said, "The developers needed measures that can help them in developing projects on time such as help in loans from banks, single-window clearance, ITC benefit, etc. These topics were not touched upon by the finance minister and we expect that the government will take care of these soon. The minister has announced measures that might streamline funds. The real estate sector needs financing for incomplete viable projects, and we hope that banks will extend help to the realty sector".