We examine the concerns of the builders and property buyers ahead of Budget 2021 and whether the macro-economic concerns that the finance minister has to deal with, will allow for any sops for real estate

Every year, prior to the union budget, developers lobby hard to get the best deal, while buyers have their own set of demands. The finance minister is expected to walk a tightrope, to balance the concerns of various stakeholders. The last a quarter of the calendar year 2020 witnessed pent-up demand in the real estate the sector, with various incentives for buyers including low home loan interest rates and reduced taxes (for example, in Maharashtra). This has made developers realize the importance of end-users. While some of the wants and needs of developers and buyers are common, there remain some diverging opinions, ahead of Budget 2021.

Industry status

Investment subsidy for affordable housing

Single-window clearances

Reduced levies, along the lines of that in Maharashtra

Availability of funds

Longer repayment cycles

Lower tax on raw materials

Extension of the exemption from notional rent on unsold inventory to three to five years from the present two years after receiving the occupancy certificate.

Lower interest rates

Increase in the income tax exemption limit to Rs 5 lakhs

Deduction of Rs 1.50 lakhs for repayment of principal on home loan beyond Section 80C

Section 24(b) and Section 80 EEA for homes worth Rs 45 lakhs, to be extended up to Rs 1 crore

Waiver of GST on under-construction properties

Lower stamp duty

Loan moratorium in wake of job losses or salary cut

Removal of capital gains tax

Enhanced threshold for variation between circle rate and transaction value.

Aditya Kushwaha, CEO and Director of Axis Ecorp, says that the government should reduce taxes on rental earnings, extend the cap on PMAY interest subsidy and re-examine the timelines of measures that have already been unveiled. Extension of the standing moratorium period on home loans and RERA timelines must be re-looked, he adds. “Affordable housing is very likely to get another booster shot. However, the upcoming budget also needs to focus on the larger market. I am hopeful that the Union Budget 2021-22 will relax income tax norms, offer single-window clearances and GST reforms. Measures that ease the liquidity issues that are being currently faced by the sector, will boost investment in real estate,” says Kushwaha.