The Real Estate sector is considered one of the most crucial sectors for the Indian economy. It contributes more than 15% to the country’s GDP and apart from making major contributions to the GDP growth, it also provides employment to a major group of people. Hence, the sector plays an important role in economic growth and stability.
It has played a vital role in recovering the economy after the coronavirus pandemic. The sector relies heavily on government policies and therefore favorable policies and regular cash flows are very essential for proper and continuous functioning of this sector. Continuous functioning ensures a good status thus helps to raise funds for projects from different schemes and proposals.
Expectations of Real Estate sector from Union Budget 2021-22:–
The first and foremost expectation from the budget is to set off GST paid on inputs like cement. This will help to reduce the cost of construction which ultimately results in lower property prices.
In addition, the sector expects a GST amnesty for under-construction projects in the housing sector. These reforms will help in boosting the demand in the housing sector and surpass the prevailing financial crisis.
The sector also seeks high tax relief for home buyers as well. Under Section 24 (b) of the IT Act, a cap of Rs 2 lakh on housing loan interest needs to be improved and it should be increased to Rs 4.9 lakh approx. Giving tax relief to buyers will put more disposable income in their hands and eventually increase the demand.
A large number of real estate projects begin with the help of various sources of funding. Therefore, the government should guarantee some exemptions to the fundraising norms and ensure the accomplishment of substitute investment funds. Also, Government should boost the morale of private sectors to invest in the housing sector, mainly in affordable housing.
In today’s scenario, liquidity crunch, the major problem faced by the real estate sector. This leads to delay in possession or project delivery, high project cost, and ultimately higher property prices.
In September 2020, SWAMIH fund created to give relief and support the pending projects. It provides last-mile funding to middle-income and affordable residential projects. The government should continue SWAMIH funds and entrust more capital flows so that a large number of residential projects in Tier II and Tier III get a benefit.
Now the Indian economy is recovering from a pandemic and all industries, including real estate, are looking at the Union Budget 2021 as a ray of hope. Because the budget has the potential to improve the economic condition.
Experts said if the above-mentioned demands fulfilled in the Budget 2021-22, then real estate sector will gain a considerable boost for upcoming years.