Budget 2023: Real Estate Sector Seeks Tax Breaks From Govt In This Year's Budget

Union Budget 2023: National Real Estate Development Council has suggested that certain regulations and taxation barriers should be removed in order for the real estate sector to grow and prosper.

Budget 2023: Real Estate Sector Seeks Tax Breaks From Govt In This Year's Budget
Budget 2023: Real Estate sector seeks tax breaks from govt. (ANI image used for representation)

WITH the Union Budget for 2023-24 slated to be tabled on February 1, India's real estate including several other sectors has been putting forward its pre-budget recommendations to the government. The National Real Estate Development Council (NAREDCO), the apex body real estate industry, in its memorandum to the government, has suggested that certain regulations and taxation barriers should be removed in order for the real estate sector to grow and prosper.

The recommendations were included particularly those concerning the deduction of interest for customers looking for a home loan, besides the tax load on developers working on affordable and rental housing.

The real estate sector which is believed to be among the key sector for India's economic development has shown stable growth in recent years. Following the enormous growth last year, home ownership has unquestionably become a secure investment.

"The Indian real estate industry is one of the fastest-growing sectors in the country, driven by factors such as urbanization, rising disposable incomes, and a growing middle class. The industry has experienced a paradigm shift in the last two years, with people looking out for a sustainable future – the need of ‘having a house’ has increased massively. Following the enormous growth last year, home ownership has unquestionably become a secure investment in these extremely volatile times," said Siddharth Katyal, Group Director, Omaxe Ltd.

Additionally, NAREDCO has also recommended amending or removing certain sections of the Income Tax Act and incentivising business entities and individual investors looking to invest in the capital-intensive sector. 

"Developers should be exempted from the burden of tax on notional rental income under Section 23(5), said Rajan Bandelkar, president of NAREDCO, adding that the idea of notional rent levied opposes the idea of promotion of rental housing in India, ANI reported.

"To keep the momentum going, measures need to be taken to bolster confidence in the industry. This includes expanding the deduction available for home loans under Section 24 (b) from Rs two lakhs to Rs five lakhs. Such an incentive will stimulate demand and lessen the housing deficiency in the nation," he added.

The Covid-19 pandemic created significant obstacles for the Indian real estate sector, which has since recovered and performed reasonably well in 2022. This year's growth outlook is expected to be excellent. Omaxe Ltd. Group Director said there will be robust growth in both residential and commercial segments in real estate this year also, adding, "We are optimistic that the government would shape its policy actions to further promote real estate demand this year," Katyal said.

"Making 2023 a crucial year for robust growth in the real estate market in both residential and commercial segments. We believe that the Government’s ‘Housing for All’ objective will straightforwardly incentivize them to lease their homes to the targeted segment, augmenting the efforts to increase housing stock in this segment. We are optimistic that the government would shape its policy actions to further promote real estate demand this year. With a home being a constant appreciating asset that creates generational wealth, we can assume that the future of Indian residential real estate," he added.

Meanwhile, Ramesh Ranganathan, CEO, K Raheja Corp Homes als said, "The Real Estate sector needs to be given industry status. We expect policies and reforms that will further boost the industry, like tax breaks, single-window clearance, encouragement of home purchase and rationalization of GST for raw materials."

"With the Governments's emphasis on Housing, home purchase needs to be incentivised through higher tax deductions. The residential property holding period needs to be revised downward from 36 months to 12 months, for qualification as long-term capital asset. To ensure seamless balance of supply and demand, promote ease of doing business and drive further investments into the industry, a single-window clearance system is the need of the hour. Intervention is also needed to rationalise GST rates for construction materials like steel and cement," he added.

The union government is in the process of finalising the Budget 2023-2024 document to be presented on February 1. Budget 2023 is likely to be the last full budget of the Modi government in its second term with the next Lok Sabha.

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