Real Estate Sector’s Wishlist for Union Budget 2025: A Pathway to Economic Growth
As India grapples with economic challenges stemming from global hurdles, a weakening rupee, and slowing consumption, the real estate and housing industry is stepping up its advocacy for more incentives. Industry leaders argue that the real estate sector can serve as a significant growth engine for the country, and they have submitted a comprehensive wishlist to the North Block for consideration in the upcoming Union Budget 2025.
Addressing Key Challenges
G. Hari Babu, National President of the National Real Estate Development Council (NAREDCO), emphasizes the need for the government to address "key challenges and propel the real estate sector towards sustainable growth." One of the primary requests is to revise the affordable housing price cap from ₹45 lakh to ₹60 lakh. This cap has remained unchanged for a decade, failing to account for rising input costs and inflation. Babu also advocates for increasing the income tax deduction limit on interest payments under Section 80C from ₹2 lakh to ₹5 lakh, alongside reducing home loan interest rates to make homeownership more accessible.
Policy Reforms for Affordable Housing
Babu further highlights the importance of policy reforms, such as reintroducing Section 80IBA incentives and removing Minimum Alternate Tax (MAT) provisions, to revive affordable housing development. He suggests restoring interest subvention under the Pradhan Mantri Awas Yojana (PMAY) for loans up to ₹6 lakhs and offering fixed interest rates of 5% for loans up to ₹25 lakh. These measures aim to stimulate demand and make housing more affordable for the average Indian.
Encouraging Investment and Tax Reforms
To further encourage investment, the government is urged to lift the ₹10 crore cap on capital gains tax exemption and consider introducing a uniform long-term capital gains tax across asset classes. Additionally, discontinuing the deemed rental income tax on unsold inventory under Section 23(5) and increasing the safe harbor limit from 10% to 25% would align stamp duty rates with market realities, fostering higher transaction volumes.
Niranjan Hiranandani, Chairman of NAREDCO, echoed these sentiments during pre-budget consultations, emphasizing the need to elevate the affordable housing sector, which is currently experiencing negative growth. He calls for an escalated flow of funds to reinvigorate this crucial sector, promoting inclusivity and sustainable urban development.
Infrastructure and Rental Housing Expansion
The wishlist also includes demands for improving urban infrastructure, enhancing energy and transportation facilities for sustainable urban growth, and expanding rental housing. Hiranandani advocates for deleting notional income from house property held as stock-in-trade to facilitate the creation of sufficient rental housing stock, aligning with the ‘Housing for All’ objective.
Taxation and Safe Harbor Adjustments
On the taxation front, Hiranandani suggests adjusting the safe harbor for ready reckoner rates and increasing the safe harbor from 10% to 25% to reflect more realistic market conditions. He also recommends rationalizing individual tax rate slabs from the current 37% to 25%, which would enhance disposable income and incentivize market participation.
Industry Status and Single-Window Clearance
Industry leaders, including Sanchit Bhutani, Managing Director of Group 108, stress the importance of granting industry status to the real estate sector. This recognition would facilitate easier access to low-cost financing and stimulate demand and supply. The implementation of a single-window clearance system is deemed critical for expediting project delivery and saving valuable time for developers.
Focus on Tier-II Cities and Sustainable Development
As the real estate sector looks to the future, there is a growing emphasis on the potential of Tier-II cities as economic development engines. Yashank Wason, Managing Director of Royal Green Realty, highlights the need for policies that support various housing segments, infrastructure growth, and improved connectivity in these cities. The budget could enable Tier-II cities to become independent centers of growth, contributing significantly to India’s urban transformation.
Conclusion: A Hopeful Outlook
While the wishlist from the real estate sector is extensive, many of these demands are expected to be part of the Union Budget 2025, particularly the continued push towards housing for all and making affordable housing accessible to all. As the industry awaits the unveiling of the budget on February 1, the hope is that the government will recognize the potential of the real estate sector as a cornerstone of economic growth and implement measures that foster a sustainable and inclusive housing market.
In summary, the upcoming Union Budget presents a critical opportunity to address longstanding challenges in the real estate sector, paving the way for a more robust and resilient economy. The collective voice of industry leaders underscores the importance of timely reforms that can catalyze growth and enhance the quality of life for millions of Indians.