Indian Union Budget 2021-22: Hit hard by the pandemic, almost all industries reeling under the current slowdown have set their eyes on this year’s budget, and real estate is no exception. The realty sector, which contributes more than 8% to the Indian economy and is the second-largest employer after agriculture, is looking for a big push from the government in the form of policy support for its recovery and smooth functioning.
Industry experts say that although the government has announced various measures in recent months to beat the unprecedented impact of COVID-19 on the overall economy and the realty sector, however much more remains to be done to put real estate back on track.
Amarjit Bakshi, CMD, Central Park, says, “In an attempt to keep the economy rolling amidst the pandemic, the government has already taken several concrete steps in terms of fiscal and policy support. We expect the Union Budget 2021 to sustain this momentum. Real estate is a key contributor to GDP and the second-largest employer in India. Fulfilling the long-pending demand of granting industry status to the sector will aid economic growth. Streamlining of GST and reintroduction of the input tax credit will further ease the liquidity crunch, securing seamless construction activities at the project sites.”
Anuj Kumar Garg, Vice President-Customer Engagement & Distribution, Viridian RED, says, “The aggressive push to the industrial and manufacturing sector will help strengthen the backbone of the real estate sector. With the focus on Atmanirbhar Bharat, we expect the government to bring reforms and announcements in improving the manufacturing sector. The government must consider setting up dedicated clusters, export zones, and tax incentives reinforcing an advanced ecosystem. Such steps are further likely to enhance the growth of the real estate sector. Simultaneously, rationalizing the GST structure along with the reduction in input credit, stamp duties, and registration charges will give the much-needed thrust to the real estate sector. We also urge the government to consider the single-window clearance mechanism for the realty sector.”
The government should also accelerate investment in infrastructure development in state capitals and tier 2/3 cities, and encourage private sector investment in these cities.
Mohit Goel, CEO, Omaxe Ltd, says, “The Union Budget 2021-22 will play a pivotal role in sustaining the revival process of the Indian economy which witnessed one of the worst economic slowdowns in 2020 due to the COVID-19 pandemic. The government must accelerate investment in infrastructure development in State Capitals and tier 2/3 cities so that these cities can emerge as the alternative centres for business and employment. India’s urban population is expected to grow to 590 million by 2030 and massive effort and investment in urban rejuvenation will be needed, including from the private sector. The government must encourage private sector investment in these cities by opening avenues and providing tax breaks and incentives in areas like real estate, IT, BPOs, retail, banks etc. Metro Rail, expressways, multi-land use projects, integrated townships, commercial and residential redevelopments are some of the areas the government must look towards.
Exemption extension under Section 80C of the Income Tax Act to invest in REIT and a hike in tax rebate from Rs 2 lakh to Rs 5 lakh on housing loan interest rates are also on the wishlist of the realty sector.
“With a well-performing track record over the last few years, India’s commercial real estate swiftly bounced back in the post-COVID era. Picking up the pace, the commercial segment witnessed some great deals attracting great investments in its portfolio. The upcoming budget has set a few expectations for the realty sector and foremost is the ease of liquidity. Considering its significance, it is of utmost importance that the government should consider the exemption extension under section 80C to invest in REITs starting with Rs 50,000. Moreover, a hike in tax rebate from Rs 2 lakh to at least Rs 5 lakh on housing loan interest rates under section 24 of the Income Tax Act is expected to increase demand in the housing segment in 2021,” says Pankaj Bansal, Director, M3M
Shashank Vashishtha, Executive Director – Exp India, says, “The Union Budget should prioritise growth in 2021 after the majority of the past year was marred by COVID-19. Real estate is the second-largest employer after agriculture in India and contributes about 10% to the GDP, directly and indirectly. We expect the Union Budget 2021-22 to grant industry status to real estate that has been a long-standing demand of the entire fraternity. This move will allow access to credit at a lower interest rate and attract investment into the sector. Waiver in stamp duties for first-time homebuyers and senior citizens or subsuming them with GST for under-construction projects will boost consumer sentiment and encourage sales.”
Over the past few years, the government has provided a series of incentives to propel affordable housing in an endeavour to achieve Housing for All by 2022. “There is a need, however, to revise the limit for affordable housing from Rs 45 lakh to Rs 60 lakh as most of the houses in metropolitan cities such as Delhi-NCR and Mumbai-MMR do not qualify in this category, resulting in a loss of 1% GST benefit. At the same time, measures such as increasing the allocation to Special Window for Completion of Construction of Affordable and Mid-Income Housing Projects (SWAMIH) will infuse liquidity and revive stalled projects,” Vashishtha adds.