On February 1, 2020, Finance Minister Nirmala Sitharaman will present one of the most anticipated Union Budgets in recent times. Here are the top five decisions that the real estate sector looks forward to.
Immediate implementation of AIF
The Alternate Investment Fund (AIF) is the prime focus of the real estate industry right now, which continues to seek fast measures to ease the slump in the housing sector. While in 2019 the government approved Rs 25,000 crores to propel movement in the real estate and ancillary sectors, the industry is now hoping for provision for a speedy implementation.
Renewable energy policy
Ease of implementation of renewable energy infrastructure is high on the real estate and infrastructure industry’s wishlist for the upcoming Union Budget.
Infrastructure companies request the government to introduce renewable energy policies that do away with cross-subsidisation and transmission fees, which will make clean energy more affordable. According to companies belonging to different sectors in infrastructure, especially cement, renewable energy projects of up to 12KW to 15KW can be set up if costs are reduced.
Improve taxation
The real estate industry hopes that the government will include significant tax reliefs that can help prop up the sector.
Expectations include:
- Increasing the current tax rebate of Rs 2 lakhs offered to homeowners under Section 24 of the Income Tax Act on their home loan interest
- Implementation of land reforms
- Allowing more inflow of liquidity to increase investor interest and infusion of capital
- Single-point clearance and simpler processes for faster movement of housing projects
- Reducing land acquisition costs and stamp duty charges
- Urging private sector investments in housing by offering more incentives and lower interest rates
Change fiscal deficit target
Most industries, including real estate, are in favour of relaxing the fiscal deficit target and leveraging the flow of money to boost housing demand.
Currently, the government is expected to run a deficit beyond 3.3% of the GDP, which was announced in the Union Budget 2019-20 mostly due to the recent corporate tax cuts. Interestingly, most experienced economists echo the thought and hope that the government breaches the fiscal target.
Bring in changes to GST
According to influencers in the real estate and affiliated industries, demand for housing can be resurrected by bringing back the input tax credit process in the GST system.
With construction costs being high in the affordable housing segment, the return of input tax credit will improve realtor margins and help reduce property prices.