When global economy is facing new challenges wriggling itself out from Covid-19 impact, the Union Government is poised to present the annual budget in February in 2023-24. In spite of global recession, Indian economy is progressing with stability and is predicted to achieve a GDP of 6.8 per cent in 2023. Coming to realty sector, it is progressing strongly after going through upheavals for about two years. However, increased lending rates on housing loans, increasing inflation are some of the causes of concern for the budget.
The budget should focus on increasing prices of affordable homes, extending incentives to startups in realty sector, encouraging stability in real estate sector and so on. The demand was encouraging in realty sector during 2022. Several developers have been predicting dole outs from government to the realty sector to sustain the demand in 2023 too. The realty sector pins many hopes on the budget.
Especially it seeks to curtail the lending rate on housing loans, which is proving to be a dampner on the demand for properties in the market. Tax exemption limit on interest on housing loans should be increased from Rs 2 lakh to Rs 3-4 lakh. There should not be limitations on buying home for residential purposes or rental purposes. Increasing the exemption of interest on housing loan from the income tax would push the demand for properties in the market. Experts seek IT exemption under Section C of the IT Act on investments in commercial real estate from Rs 50,000 onwards.
Realty sector expects from Union Budget!
- Continuation of the 100 % tax holiday extended till March 31 last year on affordable projects, extended under IT Act Section 80 IBA, should be continued further.
- If anyone repays the home loan in toto, there should be a provision to exempt the repayment from tax under Section 80 C of the IT Act. Tax exemption on repayment of housing loan is applicable to only Rs 1.50 lakh in the principal amount. However, the ceiling should be increased to Rs 5 lakh to derive tax benefit.
- Because of global developments, construction material costs have increased, pushing up the construction cost. In this backdrop, the GST on building materials like cement should be reduced.
- To attract more investments in real estate sector, tax benefits should be increased.
- Startup centric programs should be widely implemented. Financial incentives should be provided to specific sub-sectors that can reduce input costs and enhance liquidity. GST registration, obtaining MSME documents, tax filing number, tax slabs, etc. for companies eligible under the Startup India scheme should be completed through a single window clearance system.
- Government should give incentives to companies committed to developing green and sustainable buildings. Developers who are constructing green buildings have the opportunity to get exemption from income tax for ten consecutive years in a block of 15 years. Also, the sovereign green bonds announced in the last budget should be increased further in 2023.
- To reduce logistics costs, there is scope in the budget to extend the subsidy to electronic vehicles. The budget should be aligned with the national logistics policy to attract more investment in connectivity projects, logistics and infrastructure development through public-private partnership.
