The real estate industry’s wish list for Budget 2024 includes tax breaks for homebuyers, industry status, and a broader definition of affordable housing.
Today, Nirmala Sitharaman, the finance minister, will present the budget for 2024. The real estate industry has been pushing for more tax breaks for developers and home buyers, a broader definition of affordable housing, an increase in the amount exempt from paying interest on mortgages, and increased retail participation in Real Estate Investment Trusts, or REITs.
It is important to remember that Budget 2024 is an interim or vote-on account budget.
Exemptions from taxes
To increase demand for residential real estate, the Confederation of Real Estate Developers’ Associations of India (CREDAI) has urged the government to raise the tax exemption limits on principal amounts and interest paid on home loans.
It recommended in its pre-budget recommendations that the housing loan principal repayment deduction stands for a separate or stand-alone exemption. To increase the principal repayment of the housing loan beyond the current cap of Rs 1.5 lakh, CREDAI has requested a deduction under section 80C.
The current tax deduction cap of Rs. 2 lakhs for self-occupied property should increase to roughly Rs 3-4 lakhs. When working with a let-out property, restrictions are possible.
“In the next budget, homebuyers hope to see more tax benefits. Raising the existing Rs 2 lakh tax rebate on housing loan interest under Section 24 of the Income Tax Act to a minimum of Rs 5 lakh is one of the main expectations. According to Piyush Bothra, CO-Founder and CFO of Square Years, ‘“this adjustment is crucial to bolster housing demand, especially within the affordable housing segment.”
Expand the SWAMIH Fund to Rs 50,000 crore in size.
Real estate experts suggest raising the overall size of the Special Window for Completion of Affordable and Mid-Income Housing Projects (SWAMIH) fund established under the Special Window for Affordable and Mid-Income Housing to Rs 50,000 crore to boost the housing market and guarantee the completion of more delayed projects, even with the recent capital infusion of Rs 5,000 crore.
Modifications to the meaning of affordable housing
Standardizing and streamlining the definition of affordable housing across government programs and financial institutions can assist homebuyers in being eligible for more affordable financing options within that specific category, according to recommendations made by the real estate industry.
CREDAI pointed out that affordable housing was defined in 2017 and has stayed the same since, with a cap of Rs 45 lakh. It was proposed that “a unit with 90 square meters of RERA carpet area in non-metros without a cap on the price tag” be added to the definition of affordable housing.
One way to address the growing demand for affordable housing in urban and rural areas would be to implement policies that provide tax breaks to developers for building affordable housing. It recommends reintroducing the 100% tax holiday under Section 80IBA for affordable projects.
The founder and chairman of Signature Global (India) Ltd., Pradeep Aggarwal, suggested that the government relaunch the CLSS scheme, raising the threshold for affordable housing to Rs 75 lakhs and expanding the carpet area to 90 square meters.
Expand the requirements for PMAY scheme eligibility.
Knight Frank India reports that the proportion of sales in the affordable housing sales group, which includes real estate under Rs 50 lakh, has gradually decreased from 48% in 2018 to 30% in 2023. Affordable housing sales have decreased 16% year over year in 2023, even though overall home sales are at a 10-year high. In an inflationary environment marked by high-interest rates and rising home prices, buyers in this market segment are most affected by affordability restrictions.
“The PMAY program, which offers a central grant, is good through December 2024. The most effective tool the government currently has to support buyer affordability in economically disadvantaged areas is this program, which continue until December 2025. The PMAY scheme’s eligibility requirements limit homebuyers to receive interest subsidies to Rs 2.3 and 2.7 lakhs. As per Knight Frank India Chairman and Managing Director Shishir Baijal, the criteria for affordability could be enhanced.
Incentives for senior living
Senior care services are subject to the 18% GST slab in India.
The real estate industry anticipates senior care-specific investments and initiatives in the Union Budget 2024. By the end of this decade, the $12-15 billion senior care market in India will soon reach $40-50 billion, necessitating the creation of an ecosystem involving the public and private sectors, solid policy frameworks, and increased care capacity.
According to Rajit Mehta, MD & CEO of Antara Senior Care, “the spending on non-prescription healthcare will reach around $5.33 trillion by FY25, and sustained investments in geriatric healthcare infrastructure, skilled workforce development, and wellness services for seniors would ensure better quality and access for Indian consumers.”
Encourage purchasers to purchase properties from RERA-registered developments.
There should be incentives for buyers to choose properties from RERA-registered developments. According to Abhay Upadhyay to the Forum for People’s Collective Efforts, a pan-Indian homebuyers’ organization, “this will encourage homebuyers to buy only into real estate projects that stan with RERA and bring more builders under the ambit of the regulator.”