Issues such as liquidity constraints, complex regulatory frameworks, and the need for infrastructural upgrades remain at the forefront of industry concerns. The affordable housing segment has seen a slowdown, highlighting the need for targeted policy interventions.
| Photo Credit: K. BHAGYA PRAKASH

In India’s socio-economic landscape, the real estate sector has consistently proven to be a key pillar of strength and growth. As the nation weathered global storms and internal challenges during recent years, this resilient industry stood tall, not merely surviving but thriving. 

The sector has been instrumental in driving economic progress, creating jobs, shaping urban development and laying the very foundation of India’s progress. 

Last year, the industry witnessed robust expansion, with the residential property market marking 48% year-on-year growth. Housing sales and new launches have surged, with a notable focus on mid-range and premium segments. 

The transactions in the commercial segment also doubled during the year.

Also read:Union Budget 2024: Real estate’s wishlist

As we examine the sector’s recent performance and its impact on the broader economy, it becomes clear why real estate demands our attention and support. 

It continues to be a driving force behind India’s economic growth, actively building the nation’s path to prosperity. However, there also lie persistent challenges that continue to hinder the sector’s full potential. 

Issues such as liquidity constraints, complex regulatory frameworks, and the need for infrastructural upgrades remain at the forefront of industry concerns. The affordable housing segment has seen a slowdown, highlighting the need for targeted policy interventions.

As we approach Budget 2024, the industry stakeholders are looking to the government for policy measures that can address industry-specific needs and propel the sector towards sustainable growth. 

Even though the government has increased budget allocations for infrastructure upgrades sustaining this growth requires a few critical steps.

 From potential tax reforms and infrastructure investments to measures addressing ease of doing business and sustainability, the real estate’s wish list is comprehensive. 

Let us further understand the industry expectations and how policy reforms could play a crucial role in shaping the trajectory of this vital sector.

Key Expectations

Tax relief for homebuyers: Industry experts are advocating for an increase in the deduction limit for home loan interest under Section 24 of the Income Tax Act, currently capped at ₹2 lakh per annum.

Additionally, there are expectations for the reintroduction of a separate section for principal repayment of home loans, which was earlier available under Section 80C but is now clubbed with other investments. Furthermore, Income Tax on rent of residential properties should be waived for three years to promote housing and make returns attractive.

Limiting taxes: From land acquisition and joint development agreements to construction, completion, and final sale, the cumulative tax exposure from both Central and State governments can be overwhelming. A key proposal is to implement a defined cap on the total tax burden, ensuring it doesn’t exceed 45% to 50%.

Industry status for housing: This could unlock easier access to financing for developers, reduce borrowing costs, and attract more significant investments in the sector.  

Green building initiatives: With an increasing focus on sustainability, the real estate sector is anticipating incentives for green building practices. This could include tax benefits for developers implementing eco-friendly technologies, subsidies for green building materials, and incentives for homebuyers opting for certified green homes.

Ease of doing business: This includes streamlining approval processes, reducing the number of permits required, and potentially introducing a faceless single-window clearance system for real estate projects across the country.

Support for stressed projects: This could include the expansion of the government’s SWAMIH (Special Window for Affordable and Mid-Income Housing) investment fund or the introduction of new mechanisms to complete stuck projects, benefiting all stakeholders. 

GST rationalisation: The Goods and Services Tax (GST) regime continues to be a point of discussion in the real estate sector. There are hopes for further rationalization of GST rates, particularly for under-construction properties. 

Reviving affordable housing initiatives:  The budget should consider reinstating incentives such as the Credit Linked Subsidy Scheme (CLSS) under the Pradhan Mantri Awas Yojana (PMAY). 

Additionally, providing 100% tax holidays for developers could significantly attract more investment into this segment.

(Sanjay Dutt is MD & CEO, TATA Realty & Infrastructure Ltd.)