Budget 2022 Expectations Real Estate: Rs 5 lakh home loan interest, Income Tax 80C amendment, GST reduction and more
Budget 2022 Expectations Real Estate: "The budget should pay special attention to creating a much healthier banking system to drive accessibility and availability of improved and low-cost credit to home buyers."
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Budget 2022 Expectations Real Estate: 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. There are a lot of expectations from Budget 2022 as people from various walks are pinning high hopes on the Modi government's decisions and announcements on various sectors. Here is what Amit Agarwal, Co-founder and CEO of NoBroker.com, has to say on Budget 2022 Expectations for Real Estate sector.
"The real estate sector has shown extraordinary resilience against the pandemic, and is now riding on a positive growth trajectory. The sector’s buoyancy is attributed to numerous factors like stable property prices, lucrative discounts by builders, and historic low home loan interest rates. And this growth can be accelerated with a few measures that could be considered in this year’s budget," Amit Agarwal said.
Rs 5 lakh home loan interest
"Home purchase is currently on the priority list for many people. The same was revealed in NoBroker annual real estate survey 2021. As of now, the interest rates on home loans are in the range of 6.5-7 percent per year, but buyers who are looking to avail a loan of over INR 30 lakh cannot claim deduction against the entire interest paid in the initial years due to a cap of Rs 2 lakh per annum against interest rate deduction under section 24(b) of the Act. The need of the hour is to bring in more robust demand in the home-buying segment. Pushing the tax rebate on housing loan interest rates from the current Rs 2 lakh to Rs 5 Lakh or above could trigger healthier demand for housing, especially in the affordable and mid-segment categories," he said.
"Another relevant thing that can be looked at is the definition of affordable housing. While the size of units can be standardized, the standardization of price is not viable across cities. For instance, property prices in Mumbai are significantly higher than those in Kanpur or Kolkata. That is one area the budget could look into and redefine. If the definition of affordable housing be readjusted to city specific standards, it will have a positive impact on the sector," he added.
Moreover, many benefits have been outlined for the affordable segment over the years. Along these lines, if the government introduces some benefits to the mid-segment housing as well, it would ring in better demand and translate into the faster recovery of the real estate sector.
Section 80C of the Income Tax Act, 1961
"The budget should pay special attention to creating a much healthier banking system to drive accessibility and availability of improved and low-cost credit to home buyers. This can be achieved through priority sector lending categorization of home loans. The budget could focus on amending Section 80C of the Income Tax Act, 1961 to increase the repayment time limit of housing loan principal. This will reduce the burden of home buyers to some extent by allowing them more time to repay the money. It would pull in more buyers in the coming days," he further added.
GST
"There is also an urgent need to further streamline the Goods and Services Tax, which is applicable at 1% for affordable homes and 5% for other segments. A 1% cap on GST for projects under-construction would aid the quick completion of projects stalled due to financial reasons.
Commercial real estate developers, for example, should be allowed to set off the GST paid on construction materials. Improving the credit availability to smaller developers, who continue to face cashflow challenges due to the pandemic is also an area that requires government stimulus," he said.
Stamp duty Reduction
"Reduction of stamp duty in Maharashtra has reaped good results. If this can be mirrored in other states too, fence-sitters would be quick to take the plunge, and this would further boost real estate," he further sought.
GST reductions on raw materials, industry status
"A single window clearance has been due for many years now. Additionally, it is an appropriate time to award industry status to the real estate sector so that it can avail cheaper credit facilities from financial institutions. The budget should also focus on providing GST reductions on raw materials, including cement, steel, etc. Doing so can give a lot of relief to the overall developer community and help it recover faster from the slowdowns caused by COVID-19," he further added.
"There is a huge opportunity in real estate that would enable faster economic recovery. Despite the pandemic induced-challenges the sector that contributes 8% to the country’s GDP has acted resilient and home-buying is still top priority for a great majority of people for end use as well as for investment. It is time to capitalise on the sentiment by offering some irresistible benefits which we hope budget 2022 will incorporate," he concluded on Budget 2022 Expectations for Real Estate sector.
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