With a contribution of over 7-8 per cent to the GDP of the country, India’s real estate sector, also being a critical driver for employment and economic growth, is poised for further momentum in the upcoming Budget. Given the importance of the sector, it is no wonder that the real estate industry is keenly looking forward to the Union Budget for FY25 which is likely to be tabled in the Parliament by Finance Minister Nirmala Sitharaman on July 23 or 24.
With increasing demands for housing, office spaces, and commercial zones, the industry is looking forward to crucial policy changes under the Modi 3.0 administration. The real estate players are anticipating policy reforms that can further improve investment in the segment from foreign as well as domestic sources, revision in affordability housing caps, changes in taxation rules for property purchases, deduction in home loan interest rates, industry status for real estate, among other incentives.
Shrutikirti Kumar, Partner, Shardul Amarchand Mangaldas & Co, said, “As we look ahead to the budget from the new Government, the stakeholders in the real estate sector anticipate additional measures to boost affordability and demand. Key expectations include: (a) increase in the deduction limit on home loan interest, to incetivise home buyers; (b) a change in the definition of ‘affordable housing’ under the Pradhan Mantri Awas Yojana by increasing the price cap from Rs 45 lakh to reflect market variations across cities; and (c) allocating another tranche in the corpus of the Special Window for Completion of Affordable and Mid-Income Housing Projects (SWAMIH) fund, which will help in mobilising the real estate market. The long-standing demand for ‘infrastructure’ status for the entire real estate sector is also an expectation that the stakeholders continue to have.”
According to a report by ANAROCK Group, the Indian housing sector remained upbeat in 2024 to date, with housing sales and new launches creating new peaks in the top 7 cities. Sales reached an all-time high at about 4.93 lakh units in FY23-24, while 4.47 lakh units were launched. Anuj Puri, Chairman, ANAROCK Group, said, “While expectations are high for tax reliefs and other boosters, the government is also focussed on building strong infrastructure across the length and breadth of the country. Besides the usual wish list of real estate including industry status for the sector, the ‘real’ need of the hour is the revival of the affordable housing segment.” As per ANAROCK Research, affordable housing sales share has declined significantly since the pandemic, to approximately 20 per cent in Q1 2024 from over 26 per cent in 2022, and over 38 per cent in 2019. Not surprisingly, this segment’s percentage of the total housing supply in the top 7 cities also fell to 18 per cent in Q1 2024 from nearly 40% in 2019. Given the impact of the pandemic on the affordable housing segment, Anuj Puri said, “It is imperative to revive and extend significant benefits, such as tax breaks, to encourage developers to construct more affordable housing and for buyers to make it possible for them to acquire such homes.”
Here are expectations of the real estate industry from Union Budget 2024:
Anmoll D Shroff, Founder & CEO, Graanth Realty
The upcoming Union Budget 2024 can enable the country to rise to this task by boosting the real estate sector with tax incentives, improved tax structures and a single window clearance policy. These will encourage further investment in the real estate sector from both foreign and domestic sources. Additionally, tax reforms such as lower income tax for corporate and individual taxpayers, simpler tax laws, targeted incentives, and reduced GST rates on construction materials, will stimulate construction activity and create a more conducive environment for real estate players. The overall impact of the aforementioned reforms will increase the funds available to taxpayers, empowering them to become more avid consumers of real estate and, eventually, contribute to more rapid economic growth for the country as a whole.
Bhavesh Shah, Joint Managing Director, Today Global Developers
We are committed to the government’s vision of ‘housing for all’ and anticipate transformative changes in the upcoming Budget 2024-25. The real estate sector plays a pivotal role in the economy, significantly contributing to employment. From this aspect the budget is important for the sector and we hope to see critical challenges being addressed to stimulate demand and promote sustainable growth in housing. Key expectations include increased tax slabs, revised affordability caps, and various incentives. We are aligned with the sector’s expectations of an expanded SWAMIH stress fund, the reintroduction of GST with an input tax credit, granting industry status, and offering perks for first-time homebuyers. Raising the cap on affordable housing from Rs 45 lakh to Rs 65 lakh will make incentives more accessible, as diverse locations demand different price caps rather than uniformity.
Suraj Morajkar, MD, Sun Estates Developers
In 2024, the demand for residential properties is anticipated to persist, albeit at a moderated pace. This trend is fueled by the nation’s robust economic expansion and the looming prospect of reduced home loan interest rates. Given the expiration of several interest stimulants for developers and consumers, there is a pressing need to reintroduce and prolong vital incentives. These could include tax concessions aimed at incentivizing developers to focus on constructing more affordable housing units and enabling consumers to access such properties. Moreover, the government must critically assess and potentially revise the qualifying cost criteria for properties categorized as affordable housing within urban areas. This adjustment can significantly enhance accessibility and affordability for prospective homebuyers.
Dharmendra Raichura, VP Finance, Ashar Group
As the Indian real estate industry anticipates Budget 2024, it seeks measures to enhance housing accessibility and affordability. One such proposed initiative could be to increase tax exemption limits on both the principal and interest paid on home loans. Additionally, providing tax incentives for developers focusing on affordable housing could stimulate supply to meet the growing demand in both urban and rural areas. Reintroducing a 100% tax holiday for affordable housing projects under Section 80IBA is also recommended.
Moreover, with the Real Estate (Regulation and Development) Act (RERA) now implemented across most states, granting “Industry” status to the real estate sector could facilitate easier and more cost-effective financing for developers. To address the land shortage in metropolitan and semi-metropolitan areas and to make housing more affordable, the government should consider releasing government-owned lands at reduced costs. This includes lands owned by entities such as Indian Railways and Port Trusts. This strategic initiative is expected to significantly contribute to lowering overall real estate prices.
Jash Panchamia, Management, Suraksha Group
The real estate sector has several key expectations for the Union Budget 2024. These include increasing tax slabs and revising affordability housing caps to make housing more accessible. Stakeholders are advocating for increasing the affordability limit of housing from Rs 45 lakh to Rs 75 lakh in metro cities, particularly in the MMR and NCR regions. Additionally, the reintroduction of the Credit-Linked Subsidy Scheme (CLSS) and better home loan rates can help affordable housing absorption faster. Tax incentives for first-time homebuyers and the push for industry status are also on the agenda. These measures aim to stimulate demand and ensure sustainable growth for the sector.
Pradeep Aggarwal, Founder & Chairman, Signature Global (India) Ltd; & Chairman, ASSOCHAM National Council on Real Estate, Housing and Urban Development
As we look forward to the upcoming budget, the real estate sector anticipates several key reforms to drive growth and efficiency. Granting Industry status to real estate will attract investments and streamline regulations. A simplified single-window clearance system will expedite project approvals, reduce delays, and enhance overall project execution. Revising the GST input tax credit rules will reduce property prices and increase transparency, while increasing the home loan interest rebate under Section 24 to Rs 5 lakh will boost demand. Additionally, increased budget allocations for urban infrastructure and lower stamp duty rates for property transactions or waiver for first time homebuyers from stamp duty will stimulate real estate growth. Expanding the definition of affordable housing to include homes up to Rs 75 lakh with a larger carpet area of 90 sq. meters, along with the relaunch of the CLSS scheme or similar scheme will further benefit homebuyers.
Vimal Nadar, Senior Director & Head of Research, Colliers India
The real estate community looks at the first budget of the recently elected government with optimism, seeking a strategic roadmap that aligns with the overall vision of real estate reaching a USD 1 trillion market size by 2030. The industry is hopeful of housing, infrastructure development, sustainability and digitization to remain at the core of budgetary announcements. Real estate growth across segments will be instrumental in balancing out traction in tier I and other smaller cities. Focus on EV infrastructure, renewable energy and green financing can pave the way for a sustainable future and eventual realization of net-zero targets. Incentivization of green buildings through minimum alternate tax or tax breaks similar to the infrastructure sector will be particularly beneficial. The upcoming budget should explore initiatives to boost greater retail engagement in REITs and InvITs. Moreover, modifications to personal tax slabs, tax incentives have the potential to fuel consumption across various sectors, including real estate assets and allied sectors.
Sunil Sisodiya, Founder, Geetanjali Homestate
The expectations from the upcoming Union Budget under the new government center around the possibility of increased deductions for home loans, particularly aiming to provide a substantial boost to affordable housing initiatives. The sector looks forward to supportive policies that not only facilitate homebuyers but also stimulate growth in the real estate market. The budget presents a crucial opportunity to implement measures that can catalyze the sector’s revival and contribute significantly to India’s economic resurgence. It is imperative to revive and extend significant benefits, such as tax breaks, to encourage developers to construct more affordable housing and to make it possible for customers to acquire such homes.
Vishal Raheja, Founder & MD, InvestoXpert
As the Union Budget approaches, the real estate industry holds high expectations for initiatives aimed at enhancing urban infrastructure and improving connectivity. Such initiatives can spur demand for residential and commercial properties, building on the unprecedented growth seen in 2023 despite challenges like surging prices and the highest interest rates in six years. The success of the housing market, with record-breaking residential property sales in volume and value, is anticipated to continue into 2024. However, the pace may slow, driven by high economic growth and a hopeful decrease in home loan interest rates.
Annually, the real estate sector presents an ambitious wish list to the Finance Ministry, including industry status for housing and single-window clearance for projects. Key requests this year remain unchanged, highlighting their ongoing urgency. Notably, increasing the Section 24 tax rebate from Rs 2 lakh to at least Rs 5 lakh could invigorate the budget homes market. Reviving and extending expired benefits for developers and consumers is imperative to encourage affordable housing construction and acquisition. The government must also consider adjusting qualifying costs within cities’ affordable housing segments to meet current market realities.
Sandeep Runwal, Managing Director, Runwal
The Government’s commitment to creating world-class infrastructure for sustainable living will attract foreign direct investment, reflecting increased confidence among NRIs to invest in luxury real estate. To further boost investment, we suggest reducing long-term capital gains taxes on property and streamlining REITs coupled with increasing the limit of interest rebate for housing loans. Additionally, the implementation of modern regulatory frameworks and the Urban Governance Curriculum will positively impact the real estate sector. The substantial growth of the real estate sector requires increased manpower, hence, the other suggestion includes further investments in upskilling to ensure seamless and on time delivery while maintaining quality standards of the projects. We are hopeful that the budget not only will address existing challenges but also foster sector growth.
Aditya Kushwaha, CEO and Director, Axis Ecorp
The real estate sector has flourished in recent years despite challenges such as rising property prices and the highest interest rates in six years. Demand for luxury real estate and second home categories has remained robust. We anticipate that the 2024 Budget will favour homebuyers, supporting the sector’s ongoing growth. The recent focus on affordable housing is expected to continue, especially with FM Nirmala Sitharaman’s interim budget announcement of adding 2 crore more houses to the PMAY-U scheme. A similar emphasis on affordable housing in the upcoming budget would be beneficial.
Tax rationalization for construction raw materials and reduced approval costs are crucial to creating a more conducive environment for investment and development. Transparency has significantly boosted the real estate sector and further prioritised it by strengthening RERA and enhancing digital platforms for property transactions can foster trust and reduce fraudulent activities. Streamlining project approvals through a single-window clearance system is essential to address approval delays, which are significant bottlenecks. Additionally, continued focus on infrastructure projects will benefit the real estate sector and boost the travel and tourism industry.
Amrita Gupta, Director, Manglam Group; and Founder President, CREDAI Rajasthan Women’s Wing
As we look forward to the upcoming budget, our focus at Manglam Group remains firmly on enhancing housing affordability in popular cities like Jaipur, Udaipur, Goa, etc. The present scenario of soaring property prices demands immediate policy measures. Firstly, we are hopeful that the government would increase the interest rate deduction cap to Rs 5 lakh. Such a move will significantly lighten the financial load on homebuyers. Additionally, redefining ‘affordable housing’ to accommodate the realty prices could dramatically widen the pool of beneficiaries.
Moreover, we expect continuous support through incentives for affordable rental housing and significant tax benefits for first-time homebuyers. The reintroduction of GST with an input tax credit can catalyze construction activities by reducing the overall project costs, which ultimately benefits buyers. Proposals can also include broad tax reliefs, a streamlined single-window clearance process, a reduction in home loan interest rates, and a revitalization of subvention schemes. The focused announcements will make homes more accessible, aligning with the government’s vision of ‘Housing for All’ as envisioned in schemes like PMAY.
Gaurav K Singh, Founder & Chairman, Womeki Group
Key expectations include tax incentives, such as reductions in GST rates on construction materials and real estate transactions, which would lower costs and improve affordability. We also hope for increased tax deductions on home loan interest and principal repayments to encourage home purchases. Additionally, we expect enhanced regulatory and infrastructural support from the government. Implementing a single window clearance system to streamline project approvals will reduce delays and increase efficiency. We also hope for increased investment in urban infrastructure, such as roads, water supply, and sewage systems, alongside affordable housing schemes like the Pradhan Mantri Awas Yojana (PMAY) to support new housing developments. Incentives for green building practices and smart city initiatives are anticipated to promote sustainable and technologically advanced urban development, enhancing the sector’s long-term appeal and functionality.
Mohit Malhotra, Founder & CEO, NeoLiv
As a new age developer in the growing real estate sector of India, our expectations for the upcoming budget for the fiscal year 2024-25 are framed with a keen understanding of the growing middle income category and its needs for housing requirements. One of the key proposals for the input tax credit under GST is a pivotal requirement for development companies who are pivoting this new era of the sector. Granting developers access to input tax credit is not merely a fiscal incentive; it’s a strategic move that can stimulate the sector’s growth for homebuyers, and fuel economic recovery. In the context of the mid-housing segment, a pivotal focus for us, we look forward to creation of new pockets of development with focus on higher budgetary allocation for infrastructure development enabling smooth access to city centres. Mid-range housing projects play a vital role in addressing the housing needs of the middle-income demographic, and we hope that the budget recognises the future potential of this segment.
