“After the adverse effects of the pandemic, the real estate sector has seen steady recovery in the last quarter of 2020 backed by positive Government reforms, low interest rates and stamp duty reduction. Now, to sustain the momentum, a lot is expected from the upcoming Union Budget 2021. Revising the tax exemption limit for individuals under Section 24 from Rs 2 lakh to Rs 5 lakh will help increase the purchasing power of the homebuyers. The sector hopes that they should also re-introduce GST with input tax credit on under-construction properties that will help in bringing down the cost of construction resulting in reduced property prices in the market. Furthermore, the sector expects a GST waiver for under-construction properties in the housing sector. These reforms will push the demand in the sector and ease the prevailing financial crunch.
One of the major constraints for demand had been the affordability of homes. Various states had provided time-bound relaxation in stamp duty on housing purchase, which was seen to have a positive impact on demand and sales. The increase in the tax holiday available to developers under Section 80IBA to boost the affordable housing construction is another critical expectation along with the adequate liquidity support to fund the stalled housing projects. The budget could consider further steps to improve affordability. Decisions such as the removal of Rs 45 lakh cap along with the extension of 1% GST will surely be a great pact for the affordable housing segment.
Being heavily dependent on the government policies and regular cash flows, the sector constantly requires policy support for its speedy recovery and even functioning. Thus, the industry expects the government to unveil reforms that would infuse liquidity for this distressed sector.
To provide industry status is one of the long-standing demands of the real estate sector that will surely help in fundraising for the projects from various schemes. On the whole, the budget should focus on firm measures that would further reinforce demand in 2021.”