Indian Union Budget 2021-22: Almost all sectors of the economy faced myriad challenges in 2020, but showed terrific resilience in dealing with them. Business activities began gaining pace by the finish of final year and gave immense self-assurance for promising days in the New Year. Therefore, the expectations from the forthcoming Budget 2021 are massive. It is speculated that the government would come up with a slew of measures to push the business enterprise and industrial activities to attain the preferred development figures. Being a substantial contributor to the GDP, about 8%, the genuine estate sector deserves affordable interest in the price range speech, with provisions to deal with obstacles in the path of improvement.
There is a widespread anticipation that the lengthy pending-demand of market status to genuine estate will be at Centre-stage in this price range, which will aid the sector in raising funds in the market place. Infrastructure status to all residential projects is also anticipated, which presently is offered only to economical housing projects. Further, to make the sector get sufficient funds to meet all the needs, a nod for one hundred% FDI by way of automatic route in completed residential projects will be a big impetus for the sector.
A plethora of measures are the have to have of the hour to propel the development in the sector, such as the reimplementation of Input Tax Credit (ITC) and permitting realty players to avail the advantage along with low GST prices of 1 and 5 %, respectively. The other big step to encourage the sector would be Goods and Services Tax (GST) waiver for beneath-building houses for at least next 2 years. It will aid in bringing down general home charges, thereby upgrading the demand in beneath building and unsold housing units which are in substantial numbers in the metropolitan cities. Capping of GST at 1 per cent for all beneath-building projects as an alternative of comprehensive waiver will also aid genuine estate. The suggestion of CREDAI to let investment of up to Rs 50,000 in REITs as deduction beneath section 80C will be an appreciable move. Further, for lengthy-term capital gains, a reduction in holding period of REITs to 1 year from existing 3 years will work as a big stimulus. An improve from 10% to 20% in differential price had been announced final year with the applicability till June 30, 2021 the period need to be extended for at least next 2 years.
It is significant to attract the finish-customers, and the announcement of monetary incentives for them will be efficacious in this path. Personal Tax relief is one of the most demanded adjustments in the upcoming price range it can be in the type of further tax price deductions on the property loan interest payment for housing units or by amending tax slabs. Extension of the advantage of Section 80EEA to all categories of property purchasers will additional augment the demand. Furthermore, beneath Section 24 of Income Tax Act, a hike in rebate on housing loan interest prices, from 2 lakh to at least Rs 5 lakh, for generation of healthier housing demand in economical and mid-housing segments, will be a terrific move.
This price range is anticipated to address the challenges of the sector to trigger a development in the economy. Real estate is not only amongst the greatest contributors to GDP but also a terrific employment provider. Hence, the sector is confident that the price range would resolve the hindrances that come in its way. At this really ground the expectations appear fairly justifiable and there is a widespread hope that the government would look at them all.
(By Santosh Agarwal, CFO & Executive Director, Alphacorp)