After taking somewhat of a hit due to the 2020 pandemic, the real estate sector in India is finally getting back on its feet. Real estate sales have reached almost 90%of pre-covid sales levels in the top 8 cities in the country including Delhi, Mumbai, Bangalore, and Chennai.
Real estate is the third most influential sector in the Indian Economy. This means it has either a direct, indirect, or induced impact on all other sectors in India and is expected to contribute at least 13% to India’s GDP by 2025.
Now more than ever, the Indian real estate market needs a major push from the Indian government to get back to its full form. Realtors are expecting this push to come in the form of the Union Budget for 2022-23. The pre-budget consultations have already started and so have the demands from the real estate sector.
From foreign direct investment to a focus on affordable and rental housing, here are the key things that realtors are expecting the government of India’s Union Budget 2022-23 to provide room for.
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Real Estate Sector’s Expectations from Budget 2022-23
1. Realtors are looking towards the Indian Government to give industry status to the Indian real estate sector. Any sector awarded industry status is eligible for cheaper credit facilities by the banks or other lending institutions in the country.
2. They are also looking forward to receiving a long-overdue hike in the rebate under section 24 from INR 2 Lakh to INR 5 Lakh. This could drastically improve the demand for housing in the mid-segment and affordable housing categories.
3. In addition to the rebates as mentioned above, deductions on TDS are also on the table. A leading provider of coworking and office space in the NCR, Avanta’s MD, Nakul Mathur told the Mint, “We would request the finance minister to reduce the TDS deduction rates on coworking spaces as most of the receivables from the client is towards services. It would be best if the finance minister considers bringing coworking spaces into a 2% TDS slab as in the case of services from the present 10%. This will immensely help the coworking spaces in the management of their cash flows."
4. A demand for lowering the tax on long-term and short-term capital gains is also surfacing.
5. The Ministry of Housing and Urban Poverty Alleviation currently defines affordable housing as a property of approximately 645 sq. ft. in metropolitans and 990 sq. ft. in other cities in India. The upper limit of the price on properties categorised as affordable housing is INR 45 Lakh for all cities across the country. Realtors are demanding the government reconsider the price per unit for affordable housing on a per city basis. This is an inevitable step to help create more affordable housing for those who need it as NR 45 Lakh for 645 sq. ft. might be a viable option in a tier 2 city but might be too low for a major city like Delhi, Mumbai, or Gurgaon.
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Whether the Union Budget fulfils these expectations or not will only be clear after it is announced at 11:00 A.M on 1 February 2022. Till then realtors are putting out their forecasts of what the budget could entail for the rising real estate sector.
Budget 2022-23 has become a crucial factor in whether the graph of the real estate sector will keep rising this year or flatline. However, experts suggest that the government will be implementing most, if not all, of these speculated rebates and relaxations on the real estate sector through Budget 2022-23.