Union Budget 2021: In the general budget to be presented on February 1, the focus can be on healthcare, employment and real estate. The various measures announced for the real estate sector during the COVID-19 lockdown crisis and epidemic have given a further boost to the sector. To maintain the pace of sale of houses, concession in income tax rules will give more incentive to customers to invest in real estate.
Low-interest rate and easy liquidity
A low-interest rate is necessary for the surge in demand for real estate as a large part of the investment in real estate is through bank loans. The current level of interest rates is the lowest in many years, long-term loans given by banks are also acting as incentives for this sector.
The easy and additional liquidity provided by the Reserve Bank of India and the Central Government by the expansion of funds in NHB (National Housing Bank) and NABARD ensured that banks and financial institutions had access to loans to customers and investors seeking loans. There is a sufficient amount of fund. This aspect is important for the demand in future, the finance minister should ensure more measures on these till complete recovery.
Making income tax rules easier
The limit of deduction under section 80C of the Income Tax Act should be increased to encourage investment by homebuyers in real estate. In November 2020, the government has increased the exemption in the circle rate of housing units up to Rs 2 crore from 10 percent to 20 percent.
Relief of exemption in income tax rules on sales below the circle rate should be increased from the stipulated deadline of 30 June 2021 to 31 December 2021. The expansion of the scheme will help developers clear the unsold inventory, thereby creating liquidity that can be used to develop new projects. This announcement of the government will give a boost to residential real estate and provide relief to the middle class. This will act as an important step towards achieving the government’s ‘Housing for All’ vision.
Profit under CLSS increased by one year
In May 2020, the government extended the date of receiving benefits under PMAY-CLSS till March 2021. It is in the direction of claiming a home loan subsidy of up to Rs 2.35 lakh on the purchase of the first house. According to a government estimate, more than 2.5 lakh middle-income families will get the benefit of this expansion during 2020-21. With the benefit of such a large number of people, this scheme should be extended for one more year.
The epidemic has intensified the trend of digitization in real estate to increase efficiency and enhance the customer experience. The government should focus on the digitization of many key aspects of the areas, such as providing the facility of property registration for domestic and NRI buyers elsewhere, such as the developer’s offices, which will reduce congestion in the existing registration offices across the country. As a result of the digital drive, buyers and investors will be able to invest in other cities with good ROI, despite not being physically present, apart from their home cities.
ease of doing business
The real estate business requires multiple approvals, documentation with all stakeholders at multiple levels. If the required number of approvals is reduced then it can definitely prove to be helpful. With this, the project can be developed rapidly. Have a single-window system that centralizes all approval systems. Any delay in approval increases the cost to the developers, affecting the project’s feasibility, delivery timeline. In order to complete the project fast, it is necessary to get approval fast.