During its first term, the Modi government had introduced major reforms such as Demonetization, RERA, GST, Benami Transactions (Prohibition) Act, etc in order to support the real estate sector. The expectations are quite high this time, too, as the government will present its first budget after winning with a thumping majority in the recently concluded Lok Sabha elections.
In the past few months, the NBFC crisis has spread its wings in almost all the sectors including real estate. The government needs to take fiscal measures to address the deteriorating NBFC liquidity crisis. If the crisis is not dealt with soon, it will impact the recovery of the real estate sector.
A reform that has been long due is granting the industry status to the real estate sector for a proper overhaul. This move will complement the government’s recent initiatives to bring structure to the industry.
Although the GST for under construction flats and affordable housing has been reduced to 5% and 1% respectively; the input tax credit is hitting the margins of the developers eventually resulting into higher prices for the home buyers. This needs to be addressed soon by the Government.
The government should also focus on infrastructure development as it will drive real estate demand. Increasing the allocated expenditure for infra projects will eventually boost the residential and commercial markets and promote the government’s plan to create smart cities.
We hope for a budget that is conducive and propels the growth of the economy, boosts the real estate sector, benefits the home buyers and provides relief to the developer community.