Union Budget 2022: Real Estate Sector Eyes Incentives To Support Growth

Homebuyers can expect to get a bonanza from the Budget as Finance Minister Nirmala Sitharaman may propose higher tax deductions on home loans to boost housing demand, according to report

Among various segments, residential space saw a huge uptick in 2021. Image: Getty

New Delhi: The Indian real estate sector, which staged a recovery in 2021 from the economic slump of 2020, is expecting a series of incentives from the Union Budget.

Real estate sector, which is considered as the second-largest employment generator after agriculture, contributes around 6 per cent to the country’s gross domestic product (GDP).

Despite the ongoing pandemic, lower interest rates, reasonable property prices, and reduction in stamp duty have generated hope among developers. The real estate sector is hoping that the government will extend some more incentives in the upcoming Budget.

According to a report published in Mint, homebuyers can expect to get a bonanza from the Budget as Finance Minister Nirmala Sitharaman may propose higher tax deductions on home loans to boost housing demand.

The government may increase the annual tax deduction limit for repayment of home loan principal under Section 80C of the Income Tax Act to Rs 2 lakh from the existing cap of Rs 1.5 lakh, the report said. This move, if implemented, may give relief to taxpayers and a welcome fillip to real estate market.

This move by the finance minister will support the taxpayers in direct or indirect ways. This tax incentive may eventually lead to more liquidity in the hands of the buyers which could rejuvenate the real estate market.

The current rate of affordable housing is Rs 45 lakh or below in non-metro regions for a carpet area of 90 sq. metre or below. For metros, the price is Rs 45 lakh or below for a carpet area of 60 sq. metre or below.     

Among various segments, residential space saw a huge uptick in 2021.

According to some analysts, the residential segment has seen green shoots of recovery and is expected to gain further momentum in 2022.    

“The year 2021 was a watershed moment for India’s real estate sector. Even when the going was tough, the sector not only remained resilient but also emerged stronger than expected,” said Ramesh Nair, CEO, India and managing director, market development, Asia at Colliers, a global real estate consultancy.

The consultancy expects 2022 to be even better for the realty sector, even if it is marred by the new Omicron variant of Covid. “We have now learned to live with uncertainty. Gross absorption in 2022 should be about 15-20 per cent higher than this year as occupier confidence is back in the market,” Nair added.

The residential segment is expected to reach pre-Covid quarterly sales volumes in 2022 and given the strong momentum may also match the pre-note ban quarterly sales in the latter half of 2022,” said Samantak Das, chief economist and head of research and REIS (India) at real estate consultancy firm JLL.