Budget 2024: High rebates, GST rate cuts in real estate sectors

The Indian real estate sector has witnessed significant growth in recent quarters. With Budget 2024 on the horizon, there is a sense of optimism and expectation of possible reforms. By implementing favourable policies and allocating resources effectively, the government has the potential to strengthen the progress of the sector and drive economic growth.

As we await the budget announcements, there are a few key prerequisites that we would like to see met. If met, these requirements will significantly contribute to the direction of the entire industry and will soon influence it.

Expectations range from GST rate cuts to deeper cuts in mortgage interest rates, improved single-window settlement systems, falling property prices and promotion of off-centre locations. One of the key expectations from the budget is the granting of industry status. Since the sector is a key driver of economic growth, granting industry status will help it attract more investment and streamline regulatory processes.

GST rate cuts

The introduction of GST input tax regulations will effectively bring down the prices of real estate, ultimately promoting transparency in the entire process. This is crucial for companies helping the sector pave the way for a new era as it helps the sector grow, benefiting home buyers and boosting the economy.

Moreover, a potential reduction in GST rates and some initiatives aimed at stabilizing input costs could yield significant benefits for both homebuyers and developers. If these strategic interventions come into effect, one can imagine a vibrant real estate landscape. This will not only fulfill the ambitions of homebuyers but also contribute to the nationwide economic revival.

Raising the mortgage interest relief under Section 24 to Rs 2 lakh to Rs 5 lakh could give demand a boost. Increasing household budget allocation for urban infrastructure and lowering the rates of civil tax; additionally, exemption for first-time home buyers could help stimulate growth.

Incentives to increase housing availability

Restarting the CLSS scheme

Expanding affordable housing to include residential properties up to ₹65 lakhs to ₹75 lakhs with significantly larger floor areas, followed by re-launching Credit Linked Subsidy (CLSS) schemes will add value to home buyers. Other aspects include continued investment in housing and urban development, infrastructure, which is key for continued growth, improving living standards and creating more employment.

Increased tax benefits for mortgage loans

Apart from interest rate cuts, there is a growing demand to increase the deduction for capital repayment under Section 80C from the current Rs 1.5 lakh to Rs 2.5 lakh. This change would provide significant relief to home buyers by making mortgage loans reasonable. It would also boost investment in the real estate sector by encouraging more people to buy homes. This potential increase in deductions would not only ease the financial burden on individual home buyers but also help the real estate market grow.

Another key expectation is for the government to release some land resources at lower costs, especially for affordable housing projects. This would help bring down overall property prices and make housing not only affordable but also accessible to all.

Greater focus on sustainability

We expect that the implementation of various incentives in the affordable housing sector will promote sustainable and environmentally friendly housing projects. These incentives may include subsidies, tax breaks and favorable loan terms for buyers and developers who choose green construction methods.

The confirmation of this expectation is twofold.

First, it addresses the urgent need for environmental sustainability by reducing the carbon footprint and resource consumption associated with real estate development. Second, it provides accessible housing options that are affordable and energy efficient, ultimately contributing not only to long-term savings but also to improved quality of life. By promoting green housing projects, we can align with broader environmental goals while supporting the need for affordable housing solutions.

More spending on technological progress

Digital infrastructure is also expected to be further strengthened and we expect the government to allocate funds for its improvement. This includes better internet connectivity and digital banking services in rural and semi-urban areas. The budget is expected to prepare a framework that protects customers and ensures fair practices among digital lenders, thereby strengthening trust and credibility in digital transactions.

To sum up, it can be said that the implementation of such a policy will ensure that the real estate sector will follow a path of constant growth.

Written by – Atul Monga – CEO & Co-Founder, BASIC HOME LOAN

Reservation:The views expressed in this article are the author’s own and do not reflect the position of this publication.