by 99Realty 
The real estate sector in India has shown remarkable resilience and growth post-COVID-19. With the upcoming Budget 2024, there are high expectations for reforms and incentives that can further propel this sector. Key areas of focus include the rationalisation of GST rates, the promotion of affordable housing, and the granting of full-fledged industry status to real estate. In this comprehensive analysis, we delve into these demands and explore the potential impact on the sector.
Rationalisation of GST Rates
The real estate sector is advocating for the inclusion of real estate under a unified GST framework, or “one-nation, one-tax”. This move is seen as critical for simplifying tax structures and reducing the overall tax burden on homebuyers. Currently, the GST rate for under-construction properties stands at 12% without input tax credit (ITC), which is perceived as high and a deterrent for potential buyers. A reduction in GST rates or the reinstatement of ITC could make under-construction properties more attractive, thereby boosting sales and easing the financial burden on buyers.
Promotion of Affordable Housing
Affordable housing remains a cornerstone of India’s real estate strategy. Several key measures are proposed to revive and invigorate this segment:
Increasing Home Loan Interest Rebate
The sector is pushing for an increase in the home loan interest rebate from the current Rs 2 lakh to Rs 5 lakh. This adjustment is seen as essential for combating rising inflationary pressures and making homeownership more affordable.
Also Read: Decoding Interest Rates How They Impact Your Home Loan and Mortgage Payments
Reviving the Credit-Linked Subsidy Scheme (CLSS)
The expiry of the Credit-Linked Subsidy Scheme (CLSS) under the Pradhan Mantri Awas Yojana (PMAY) in 2022 has left a significant gap. Reviving this scheme is crucial for incentivizing first-time buyers of affordable homes. The scheme previously provided subsidies for housing loans to economically weaker sections (EWS) and low-income groups (LIG) for new constructions and upgrades to existing dwellings.
Redefining Priority Sector Limits (PSL)
To address the rising cost of construction, there is a proposal to redefine Priority Sector Limits (PSL). The current PSL limits of Rs 35 lakh for metro locations and Rs 25 lakh for non-metro locations are suggested to be increased to Rs 50 lakh and Rs 35 lakh, respectively. Additionally, merging the PMAY Urban and PMAY Rural schemes for CLSS subsidy, while keeping the subsidy amount the same, is recommended.
Granting Full-Fledged Industry Status
Granting full-fledged industry status to the real estate sector is a long-standing demand. This status would facilitate easier access to institutional credit and financial support, enabling more streamlined operations and growth. The sector currently contributes around 8% to India’s GDP, and recognizing it as a full-fledged industry would further underscore its importance to the economy.
Also Read: The Transformative Role of India’s Real Estate Sector: A Vision for 2034 and Beyond
Streamlining Clearance Processes
Efficient regulatory processes and expedited approvals are crucial for reducing project delays and costs. Fast-tracking clearances can positively impact project execution and returns, making real estate investments more attractive. Simplifying regulatory frameworks and reducing bureaucratic hurdles would contribute significantly to the sector’s growth.
Also Read: Emerging Real Estate Hotspots in India: Key Drivers and Future Prospects
Encouraging Public-Private Partnerships (PPP)
Creating an inventory of affordable housing through Public-Private Partnerships (PPP) is another strategic recommendation. Such collaborations can provide a substantial boost to affordable housing initiatives, empowering citizens and encouraging homeownership. By working collectively, central and state governments can foster an environment conducive to the growth of affordable housing.
The real estate sector’s expectations from Budget 2024 are centered around key reforms and incentives that can drive growth and stability. Rationalising GST rates, promoting affordable housing, granting full-fledged industry status, streamlining clearance processes, and encouraging PPPs are pivotal measures. By addressing these demands, the government can significantly enhance the sector’s contribution to the economy and ensure sustainable growth in the years to come.
