Budget 2024: Tax sops, stamp duty reduction among top demands of the real estate sector

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As the Indian economy recovered from the COVID-19-led crisis, one sector that made a stellar comeback in the past year is real estate. The sector surged on the back of positive market sentiments, economic expansion, urbanisation, evolving lifestyles, rising disposable incomes, better employment opportunities, increased business activity, and government policies, among others.

Furthermore, demand in the residential segment remained strong as sales within the space continued to breach previous highs.

That said, take a look at what the real estate sector expects for the Union Budget 2024:

1. Tax sops for homebuyers: Ramani Sastri, Chairman and MD, Sterling Developers, said that the government should raise the deduction limit for interest payments on home loans from the existing Rs 2 lakh a year to Rs 5 lakh, which will add momentum to housing demand. Further, the expert calls for a reduction in the GST levy on under-construction properties and adjustments in raw material pricing.

This year, the demands go beyond the usual expectation of single-window clearance and industry status, which could unlock financial advantages and streamline project approvals, Sastri added.

The industry also seeks a reduction in the long-term capital gains tax, or LTCG, implemented on property sales. "Exploring the possibility of reducing the long-term capital gains tax could amplify interest among homebuyers and investors, thereby contributing to the expansion of the real estate market in India," Mananki Parulekar, co-founder of Claravest Technologies, said.

2. Home loan interest rate rationalisation: Parulekar further expects the centre to reduce home loan rates. “A reduction in home loan interest rates, coupled with more flexible loan tenure options and revised credit provisioning requirements for property buyers, can stimulate real estate sales," Parulekar said.

This adjustment will then accommodate the rising property prices, ensuring affordability for individuals with salaries that may not be commensurate with these increases.

3. Stamp Duty Concession: The industry also expects a stamp duty reduction as it could catalyse higher registration rates for houses and apartments, fostering increased activity within the real estate market.

4. To augment the purview of affordable housing: Sastri of Sterling Developers noted that for a large section of the population, affordability remains the biggest challenge, and hence there should also be an expansion in the definition of affordable housing. Any tax exemption from rental income will also encourage greater investment in residential real estate.

5. Lower GST for small-scale coworking clients: Pratyush Pandey, CEO of Upflex India, said that the new age segment of coworking spaces is growing impressively. A policy reform of lower GST for small-scale coworking clients can anticipate the participation of more startups in this industry.