Budget 2022: Real Estate Expectations

The pandemic has brought about unease to various sections of society. It has made the sectors go jittery over the period owing to the uncertainties it has brought in the wake. No sector remained unaffected by the prevalence of pandemics. Some sectors have shown the ability to survive despite the trouble in the economy. The real estate sector had displayed its resilience when the COVID pandemic hit the world. This sector is showing signs of riding on a positive wave. 

There are reasons for this resilience, and one of the primary reasons has been a stable property price. Aside from that, the builders are offering discounts to the buyers, and the home loan rates of interest have been slashed in an unprecedented way. It is to be seen how this enthusiastic growth can be heightened with a few steps one can expect in this year's budget. 

Is it so taxing?

People have placed home purchases as their top priority. The fact was revealed in a survey that was conducted in 2021. The rate of interest on home loans now is in the range of 6.5 to 7 percent per annum. There is a situation here. The home buyers going for a loan over 30 lakh are not given the deduction facility against the interest paid in the starting years. There is a cap of Rs 2-lakh per year under section 24(b) of the Income Tax Act. The focus now should be on bringing in a robust demand in the home-purchase segment. There is a need to push the cap from 2-lakh to 5-lakh, which should be good for a boost in demand for homes. The main focus should be on the affordable housing sector. 

One should understand affordability with some clarity. One can review the definition of affordable housing. It is for sure that the size of the units will be the same across cities, but a standard price is not viable. Property prices in some cities like Mumbai are much higher compared to cities like Kolkata or Nagpur. The budget should bring in some clarity in this area. The definition of affordable should fit into the standards of the town. It will create a positive impact on the real estate sector. Some benefits have been offered for the affordable segment for the last few years. It will be a good idea if the government introduces benefits for the housing in the mid-segment. It might create greater demand for houses and fast recovery for the real sector. 

The budget should be attentive to forming a healthy banking system so that there is greater accessibility and availability of homes at a low cost. These will be for low-cost home buyers. 

It is felt that the budget should bring about some amendments in section 80C of the Income Tax Act. It will enhance the repayment time. It will give more time to the buyers to repay their loans.

Also Read: Impact of budget 2019 on real estate industry

Restructure GST

The GST should be streamlined. If there is a 1% cap on GST for under-construction projects, it will aid in completing the tasks faster. These projects were stalled due to financial scarcity in the segment. 

The government should consider the issues related to commercial real estate developers. The GST paid towards construction materials should be set off. The smaller developers should be provided with a credit facility. This sector, too, is facing cash-flow problems owing to the pandemic. 

Also Read: Expectations from the Union Budget 2019 for Real Estate

Slash on stamp duty

The reduction of stamp duty has shown positive outcomes in Maharashtra. Other states can follow it to encourage many people to take the plunge.

Clearance through the single window is long overdue no. Apart from this, the real estate sector should be recognized as an industry. It will allow them to get cheaper credits from various financial institutions. 

When discussing GST, we should consider providing reduced GST for raw materials like cement, steel, sand, and so on. This intervention can signal a quick revival of the sector.

The real sector is very important. There are opportunities to start some valuable reforms in this sector for a faster recovery in the present state of the economy. Home purchase still reigns supreme, and the real estate sector is an excellent contributor to the country's GDP. The government should not miss out on the opportunities to push this sector up for the common good. It will help the economy hit by the meltdown brought on by the global pandemic.

Also Read: Budget 2019: home loan borrowers need in India