The real estate sector, which is struggling with low demand, subdued sales, high inventory and price stagnation in wake of COVID-19 pandemic, expects Union Budget 2021 to give impetus to the housing sector which may yield positive results in the near future. In her second budget, Finance Minister Nirmala Sitharaman had provided some incentives to address both demand and supply in the sector. But a lot needs to be done to revive the sector.
The industry experts expect the upcoming budget to further relax income tax norms, tax rebate on housing, extension of interest subvention, GST waiver, infrastructure status for the realty and easing liquidity for the sector. Policy announcement on home loan interest rates, reduction in stamp duty and registration charges, which make a sizeable difference to the cost of a project will boost home buyers' sentiment and encourage them to go in for property purchase.
According to Lincoln Bennet Rodrigues, Founder and Chairman, Bennet & Bernard Group, known for luxury holiday homes in Goa, the real estate sector, which is one of the major contributors to India's GDP, has undergone significant changes in the last few years making it more transparent and credible. A series of key decisions taken by the government recently to revive the realty sector has improved consumer confidence and the impetus given to the residential sector is expected to yield positive results in the near future, he said.
The sector expects the government to unleash a series of reforms and consumption boosters to increasing credit off-take from banks to ease liquidity. There is specific need for income tax relief on a second home which will benefit home buyers in a big way and also stimulate the real estate sector. Single window clearance would go a long way in improving the approval process and quicken the project execution.
Post pandemic, people have realised the importance of larger spaces and self-sustained communities. Hence, the desire to have bigger spaces for the same investments would definitely shift focus from buying realty in cities to second homes in holiday destinations and hence places like Goa will definitely attract investors because of its culture, lifestyle and the value for money it offers. Overall, the industry hopes the government takes measures which strengthen the real estate sector and affirms robust infrastructure growth.
As per the industry body National Real Estate Development Council (NAREDCO) with the pandemic playing it part in bring back the focus on owing a house, the need to meet 'Housing for All' demand has to be compliance by innovative fiscal impetus and robust outlays." The fiscal impetus announced under Aatmanirbhar Bharat has led to renewed consumer demand that led to the emergence of green shoots in Indian economy and real estate sectors" says Dr. Niranjan Hiranandani, National President, NAREDCO.
Global real estate consultant Knight Frank India chairman and managing director Shishir Baijal in a pre-budget wish demanded A separate annual deduction of Rs 150,000 that will provide the much-needed fillip to opt for house purchase. On the aspect of housing demand, Section 80 C tax deduction on home loan principal repayment does not provide for a focused benefit on housing, he said.
"Hike the Rs 2 lakh tax rebate on housing loan interest rates to at least Rs 5 lakh to generate healthier housing demand, most notably in affordable and mid-segment housing. The last increase in the deduction limit under Section 80C (to Rs 1.5 lakh a year) was in 2014 and an upward revision is long overdue," Mohta who is also the Merlin group chairman said.
In recent months, the government had offered Rs 25,000 crore stress asset fund for the uncompleted housing projects, increasing the differential from 10 per cent to 20 per cent under Section 43(CA) of the IT Act till June 30, 2021 were announced apart from ongoing interest subvention scheme.