Budget 2024 Expectations: Tax Ease On Construction Material To Supporting Proptech Startup; Here's Real Estate Wishlist

Budget 2024: Real estate stakeholders Anticipate reforms to include the extension of corporate tax benefits, withdrawal of surcharges, and various other reforms

Budget 2024: Union Finance Minister Nirmala Sitharaman is scheduled to unveil the Budget for 2024 on July 23, detailing expected government revenues and expenditures spanning diverse sectors. The real estate sector in India is particularly keenly anticipating reforms and incentives aimed at stimulating growth and tackling persistent challenges.

Anticipated reforms include the extension of corporate tax benefits, withdrawal of surcharges, and various other reforms. Real estate stakeholders have shared a wish list they have for the forthcoming budget.

Amit Goyal, Managing Director, India Sotheby's International Realty, highlighted that during its latest Monetary Policy Committee (MPC) meeting, the Reserve Bank of India (RBI) forecasted a GDP growth rate exceeding 7 per cent. Sustaining this growth amidst global economic challenges should be a primary priority for the upcoming Union Budget.

“With the NDA government returning to power for the third consecutive term, we anticipate a bold, growth-oriented budget that charts a plan for the next five years. We expect announcements that will encourage capital investments and increase foreign direct investment (FDI) inflows into India. In the real estate sector, it is crucial to sustain demand for homes, as housing acts as an accelerator for over 200 ancillary sectors,” he said.

“One significant measure that has been pending for a long time and would benefit both the industry and homebuyers is the introduction of a standalone deduction for home loan principal repayment, along with raising the tax breaks on the interest amounts of home loans from Rs 2 lakh to Rs 5 lakh. This move would help mitigate the impact of increased home loan EMIs and provide much-needed relief to home buyers. There is no better time than now to implement this change, which would provide much-needed relief and stimulate growth in the housing market,” Goyal added.

According to Priyatham Kumar, Founder of Homes247, “The interim budget announced in February aims to help the middle class buy or build homes, with a focus on the PM Awas Yojana (Grameen) to add two crore houses in the next five years.”

“With the new government, the sector expects a boost in urban housing, commercial, and retail markets. Cutting taxes on construction materials from 28 per cent to 18 per cent is crucial to reducing costs, enabling developers to undertake more projects and potentially lower property prices,” said Kumar.

“Proptech start-ups, making up about 6 per cent of recognised start-ups in India, could attract significant investments, including FDIs and crowdfunding. Government support through a specialised budget policy for Proptech can further foster the real estate sector, boost activity, generate revenue, and contribute to economic growth.”

He further highlighted that proptech start-ups, constituting approximately 6 per cent of recognised start-ups in India, have the potential to draw substantial investments such as FDIs and crowdfunding. Government backing through a dedicated budget policy for Proptech could enhance the real estate sector, stimulate activity, generate revenue, and bolster economic growth.

Anuj Puri, Chairman of ANAROCK Group, stressed that the industry has high expectations for tax relief in the upcoming budget. “With Union Budget 2024-25 set to be tabled in July, the real estate sector pins renewed hope on the Modi 3.0 regime. Expectations are high for tax reliefs and other sentiment boosters. The future of the overall industry also depends on unfettered infrastructure deployment to support and improve urban living standards as well as to develop and promote newer areas,” he said.

“Credit-linked subsidy scheme under PMAY for EWS/LIG, which expired in 2022, should be revived to incentivise first-time buyers of affordable homes across cities. This will once again invigorate demand in this segment. Subject to criteria specified under government guidelines, CLSS was previously available for housing loans to EWS/LIG buyers in new constructions, and for the addition of rooms, kitchens, toilets, etc., to existing dwellings. Also, under PMAY (Rural), one could avail of this subsidy for all 'kaccha' homes being converted into 'pucca' ones, provided they fulfil the eligibility criteria. Re-introduce 100 per cent Tax Holiday to boost supply and incentivise developers to build more affordable housing,” he added.

Shubhi Jain, Principal Partner and head of CRM at Square Yards said that the real estate sector is a cornerstone of our economy, serving as one of the largest employers. The industry eagerly anticipates significant reforms in the upcoming budget under the new government. 

“Securing industry status will unlock a plethora of legal and administrative benefits, along with much-needed tax incentives. Also, while the government’s focus on affordable housing under PMAY is commendable, recalibrating strategies in light of escalating construction costs is imperative for sustained inclusiveness and effectiveness. Moreover, enhanced tax reliefs and increased deductions on home loans, currently capped at INR 2 lakhs, are pivotal in stimulating demand and supporting prospective buyers. With these measures in place, the real estate sector is poised to contribute meaningfully to India's journey towards a 5 trillion-dollar economy,” Jain said.