Budget 2023 Expectations: The Real Estate sector is still recovering from the impact of the pandemic. Affordable housing was one segment, which was badly affected during the pandemic as buyers were impacted economically. With Budget 2023 just a few weeks away, the real estate sector has started pinning hopes on various economic reforms in the upcoming Budget.
Anuj Puri, Chairman of Anarock Group, says there are many expectations that overlap with demands in the previous years but they have, so far, not been or insufficiently met. Following are the top 5 asks of the real estate sector, according to Puri.
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More tax sops for homebuyers
Puri believes there is an express need for more tax sops for home buyers as well as investors. “The Rs 2 lakh tax rebate on housing loan interest under Section 24 of the Income Tax Act needs to be hiked to at least Rs 5 lakh. This will add momentum to housing demand, particularly in the affordable segment,” he said.
Personal tax relief
The Budget should offer a degree of personal tax relief, either by way of lower tax rates or by readjusting tax slabs. Puri says that doing so would also help boost housing absorption. The last increase in the deduction limit under Section 80C (to Rs 1.5 lakh a year) was in 2014. Another favourable revision is long overdue. However, Puri thinks it is unlikely that the Budget 2023 would revise the Section 80C limit. “Instead, we may see the Budget further incentivising MSMEs and SMEs that are still struggling post the pandemic,” he said.
Change in the affordable housing price band
According to Puri, the current price band of Rs 45 lakh for a property to be considered under affordable housing is not appropriate in most cities. For instance, a price band of Rs 45 lakh or below is far too low in a city like Mumbai, where it should be increased to Rs 85 lakh or more. In other major cities, the qualifying price band should be increased to Rs 60-65 lakh.
“Such a move would have more homes qualifying as affordable housing, and many more homebuyers would be able to avail the current benefits like reduced GST at 1% without ITC, and other government subsidies,” Puri said.
“The government should seriously consider revising the price bandwidths for homes to qualify as affordable housing to align with the market dynamics of different cities. The size of units as per the current definition (60 sq. m. carpet area) is fairly appropriate, but the catch-all pricing band of up to Rs 45 lakh for affordable housing is definitely not appropriate across most cities,” he added.
Incentives to boost affordable housing
Puri said that the government must offer more incentives to boost affordable housing.
“To a noticeable extent, the pandemic derailed the affordable housing growth story since early 2020 – one segment which the current government has rightly stressed since taking charge in 2014. The affordable housing supply by private players has reduced significantly since Covid-19, largely because its buyer class was impacted economically and hence went into a wait-and-watch mode,” Puri said.
“Now, there is a need to make this segment attractive again, not least of all because it resonates well with the government’s housing for all initiative,” he added.
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Single-window clearance
“The demands for single-window clearance and industry status for real estate are among the recurrent ones and have yet to be addressed. The sector hopes that the forthcoming budget will finally address it,” said Puri.
Government spending on infrastructure has been exemplary. The real estate sector expects that it may get a further boost in the forthcoming budget.
