Real estate demand, especially in the residential segment, is witnessing a revival post the pandemic-induced slowdown. With the Union Budget 2022-23 slated to be presented on February 1,Ravindra Pai, MD of Century Real Estate, expects to receive the following support from the Modi government for the realty segment:-

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1. Demand Creation: 

"The Government should allow second home purchases and interest costs as set-offs for the salaried class. It must assure and retain low-interest rates for housing loans over the next 4-5 years at a minimum. Banks must be allowed to lend up to 90% of the house cost instead of the 75%-80% cap. We are eager to see standardisation of registration charges - these charges should be brought under GST with an input credit option for residential units. It’s also important to continue affordable housing interest subsidies, increased FSI, and tax exemptions to boost demand," Ravindra Pai said.

2. Supply Side:  

"Project approvals need to be standardised, with single window clearances given to reduce overall approval timelines. Banks should be allowed to lend up to 50% of the land value for the purchase of land for residential projects. Additionally, it’s vital that road and metro connectivity projects are completed on time to ensure suburban land is accessible and can be developed as residential areas," he added.

3. Cashflow Management: 

He further added, "Residential development must be categorised as a priority sector. Rules for lending, rating, and asset classification should be carved out and linked to the business cycle, rather than considering 30-60-90 day rules that tend to be more suitable for the manufacturing industry. We are keen to see financing rules be made less stringent to ensure projects don’t get stuck and receive working capital for timely completion. Escrow regulations must be more rigorous, and a reviewing authority should be set up to ensure customer collections are used to complete projects first. We believe a One SPV-One Escrow-One Project Model will help achieve this objective."

4. Taxation:

"We would like to see a revision and simplification of GST Input Credit and GST on joint developments. An exemption for GST on completed inventory in JD transactions would be beneficial. An increase in the personal income tax-deductible limit of Rs. 2 Lakh and an extension of the tax holiday scheme are some measures that also need to be considered," Ravindra Pai concluded.

Budget 2022

-The Union Budget 2022-23 is likely to be tabled on February 1, 2022 by Union Finance Minister Nirmala Sitharaman.

-This is the 4th Budget of the PM Narendra Modi-led NDA government in its second tenure.

-The Budget 2022 will be presented around 11 am on 1st February 2022.