6 Key Expectations from Budget 2024 to Transform Indian Real Estate

As Budget 2024 approaches, the Indian real estate sector has high hopes for reforms and incentives that can drive growth and make homeownership more accessible.

Ghar lists 6 key expectations for the Indian real estate market in budget 2024:

1. Revival of Affordable Housing

With rising land acquisition and construction costs, the affordable housing segment needs significant support to make homeownership accessible for all.Increased PMAY Cap: The Pradhan Mantri Awas Yojana (PMAY) interest subsidy is currently available only for homes costing up to Rs 45 lakh. Experts suggest raising this limit to Rs 1 crore in metro cities to bridge the housing gap for economically weaker sections.

• Renewal of CLSS:The Credit-Linked Subsidy Scheme (CLSS) under PMAY Rural, which expired in 2022, benefitted low-income homebuyers. Vivek Rao, managing director of an urban development consultancy, believes renewing this scheme is crucial for converting ‘kutcha’ homes to ‘pucca’ ones.
• Urban Planning Incentives:"Incentivising affordable housing in transit-oriented developments can promote balanced growth and reduce urban congestion.
• Affordable Rental Housing: There is a pressing need for affordable rental options. The government could explore tax incentives for developers, rent subsidies, and a robust rental regulatory framework to support the urban poor.

2. Supporting Aspirational India

India’s millennials, who comprised 54% of homebuyers in 2023, are driving the demand for real estate.Incentives for First-Time Buyers: Reduced stamp duty and tax benefits for first-time homebuyers can significantly benefit young professionals and families, notes Anil Sharma, a business analyst.

3. Simplifying GST

A streamlined Goods and Services Tax (GST) structure is essential for boosting investments in under-construction properties.Rationalising GST Rates - There’s a need to simplify GST rates on under-construction properties and ensure that Input Tax Credit (ITC) benefits are passed on to developers.

4. Addressing Project Delays

Stalled real estate projects pose a significant challenge, and special provisions are needed to protect homebuyers’ interests.

• Enhancing SWAMIH Fund Allocations: The Special Window for Affordable and Mid-Income Housing (SWAMIH) fund has been pivotal in reviving stalled projects. Increasing its allocations can further mitigate delays.
• Single-Window Clearance Mechanism: A single-window clearance system is crucial for expediting project approvals and reducing bureaucratic delays.

5. Tax Deductions and Incentives

Tax reforms can provide substantial relief to homebuyers and stimulate the real estate market.

• Increased Tax Deductions: Raising the limit on tax deductions for home loan interest payments under Section 24 and for home loan principal repayment under Section 80C of the Income Tax Act can benefit homebuyers.
• Tax Deductions in New Regime: Introducing tax deductions for residential property buyers in the new tax regime would further incentivize home purchases.

6. Improved Urban Planning

Comprehensive urban planning strategies can promote balanced growth and enhance the quality of life in urban areas.

Incentives for Transit-Oriented Developments: Encouraging affordable housing projects in transit-oriented developments can reduce congestion and improve connectivity.

As the new government prepares to present its first Union Budget on July 23, taxpayers and industry stakeholders eagerly await these much-needed reforms. Only time will reveal how the Budget addresses the needs and demands of the Indian real estate sector.