Budget 2024: Real estate sector wish list – from single-window building approvals to tax breaks

The Indian real estate industry is eagerly awaiting reforms and incentives that will boost economic growth and address long-standing challenges.

Expectations range from expanding business tax breaks to phasing out subsidies and more. Here is the wish list of property stakeholders for the upcoming budget:

NAREDCO Chairman Niranjan Hiranandani emphasised the need to extend corporate tax benefits to all, phase out subsidies and thoroughly review tax policies.

• Increase in the limit of deduction of interest on home loan from 2 lacs to 5 lacs, which will give long-term capital gains of 10 per cent comparable to equity shares.
• Reducing the property holding period from 24/36 months to 12 months to qualify as a long-term capital asset.
• The dividend tax rate for resident investors may be maintained at 10% to avoid discrimination between resident and non-resident investors.

• Corporate tax relief granted to manufacturing companies must be extended to all entities, such as companies, partnerships and individuals, in order to unify tax rules.
• The surcharge introduced as a temporary measure should be withdrawn, which should help improve tax collection.
• Extending the benefits of the 15% alternative tax rate to infrastructure and housing projects will help attract more investment and support development activities.
• Taxation of the conversion of inventories into fixed assets should be deferred until the year of actual sale of the fixed assets to ensure better availability of cash flows for tax payments.

NAREDCO national president G Hari Babu suggested giving priority to affordable and sustainable housing initiatives.

• The Ministry of Finance should allocate ₹50,000 crore for the second tranche of the Special Window for Social and Middle Income Housing (SWAMIH) fund in the upcoming union budget for fiscal year 2024-25.
• This should be accompanied by other budgetary support and regulatory relaxations, including allowing input tax credit under GST and incentives for rental housing, to achieve housing for all targets.
• Municipal charges paid to local authorities should not be subject to GST.

Arun Awasthy, Chairman and Managing Director, Johnson Controls India, said, “We are optimistic that the upcoming Union Budget, building on the Green New Deal, will focus on strengthening the energy efficiency of India’s building infrastructure.”

Awasthy said steps need to be taken to strengthen skills upskilling and innovation initiatives in green technologies to bridge the existing gaps.

• We hope that tax incentives and infrastructure upgrades will improve the quality of life in cities and spur economic growth in developing areas.
• Giving the housing sector “industry status” could spur economic growth and attract significant investment.
• Introducing a unified system for approving construction projects in the real estate sector would also streamline processes, reduce delays and increase efficiency across the sector.
• To grow, the EPC sector in India needs more investment and clearer regulations.
• New tax rules can help EPC firms overcome challenges and innovate.

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Heeralal Doshi, Founder and Chairman, Kinjal, emphasised the need to extend tax incentives to home buyers and investors, reduce GST rates on real estate and adjust commodity prices to increase affordability and demand.

• There is a clear need for more tax relief for home buyers and investors.
• The government should raise the limit on mortgage interest deductions from the current ₹2 lakh per year ₹5 lakh, which would add to the demand for housing, reduce GST on under-construction properties and impact commodity prices.
• For a large part of the population, affordability remains a major challenge. Therefore, the definition of affordable housing should be broadened as this would increase the benefits for homebuyers and increase end-user demand.
• Any tax exemption for rental income will also encourage greater investment in residential property.

Also read: Budget 2024: Affordable loans, investment in research and digital infrastructure – education sector wish list for Finance Minister Sitharaman

• A moderate cut in GST rates for the real estate sector would also make homes more affordable, boosting demand.
• We also expect a reduction in the maximum tax rate of 30 percent to increase the purchasing power of individuals.
• The Budget should offer some degree of tax relief for individuals by cutting tax rates or adjusting tax brackets, which is now a necessity.

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Published: Jul 03, 2024, 04:06 PM IST