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HomeEconomyBudget 2023: Realty seeks industry status, cheap credit, tax rationalisation

Budget 2023: Realty seeks industry status, cheap credit, tax rationalisation

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New Delhi [India], January 15 (ANI): Indian real estate sector has weathered the pandemic-induced strong headwinds and has done considerably well last year with the growth outlook for 2023 projected to be firm.

Besides the once-in-a-century pandemic, the realty sector also smartly manoeuvred the rising input costs and the cost of borrowing, and a likely recession in some advanced economies. Going ahead, much will depend on property price rise, and monetary policy rate hikes – both globally and back home in India.

Also, the developers will also keep their eyes glued to the upcoming Union Budget for 2023-24. The Union government is in the process of finalising the Budget 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 elections due in April-May of 2024, and one would definitely expect big-ticket announcements – both on taxation and capital investment.

“Despite the headwinds in the global economy along with the inflationary pressure, the challenges are unlikely to impact the housing sector in India in the near term. The upcoming budget hopefully will provide homeowners further relief by giving more interest subsidies on taxation,” said Ankur Gupta, Joint Managing Director of real estate developer Ashiana Housing.

Gupta added the buoyancy that the sector has witnessed over the past few years is set to continue in the near term.

According to Niranjan Hiranandani, Vice Chairman of the National Real Estate Development Council (NAREDCO) and a veteran in the sector, the industry expects infrastructure status in order to avail cheap long-term credit, citing the increase in the cost of borrowings in the high-interest regime.

“Industry also anticipates boost to rental housing by tax rationalization and impetus to affordable housing by revising cap up to Rs 1 cr in the metro cities so that more first-time homebuyers can avail credit link subsidy scheme benefits,” Hiranandani said.

Fiscal stimulus to the capital-intensive real estate industry has the capability to fuel economic growth as it has a multiplier effect on the allied segments, besides employment generation potential.

That said, rising commodity costs, including of steel and cement, have been a concern for developers with realty being a price-sensitive sector.

“The growing rate of interest and the mounting cost of raw materials have the potential to thwart the current growth momentum. We expect homeowner-friendly measures will be announced in Budget 2023,” said Aditya Kushwaha, CEO and Director of Axis Ecorp.

Also, saying that the luxury segment has been outperforming, and there has been an increased interest from NRIs to invest in Indian real estate, Kushwaha said he hopes the government will reconsider the applicable tax deducted at source (TDS) for the non-residents in particular, a move that may help the country build its forex (foreign exchange) reserves.

“We are also looking for a reduction in GST slabs for construction materials. This will help in combating inflation and rising cost of raw material costs. A slight reduction in GST on construction supplies like cement and steel could indirectly assist the real estate industry by reducing developer input costs and, as a result, the overall building cost,” he added.

As Budget day nears, there are varied demands from the industry players – ranging from taxation to regulation.

Ramani Sastri, Chairman and MD of Sterling Developers raised that there is a need for income tax relief on a second home and some reduction in long-term capital gains, besides making a case for interest subsidy to first-time homebuyers.

“There is a specific need for income tax relief on a second home and positive measures with regard to long-term capital gains, which will benefit home buyers in a big way and also stimulate the real estate sector,” Sastri said.

At present, a rate of 20 per cent is levied as a tax on capital gains generated through the sale of a property.

Among the realty segments, the coworking realty segment is in demand as the future of work culture is changing rapidly after the Covid. The flexible workspace revolution has begun, and 2023 is expected to prove to be a game-changer for the commercial real estate sector.

“Many large enterprises and corporates have also shifted their gears to the coworking space as they embraced the hybrid work model to suit their organizational requirements and reduce capital expenditure. Taking into consideration the growing demand and gaining popularity of hybrid working and the phenomenal growth of the coworking industry, we have major expectation from the upcoming Union Budget that can further accelerate the growth of this sector,” said Manas Mehrotra, Founder of 315Work Avenue — a leading new age coworking space provider.

The real estate sector is one of the largest employers of both skilled and unskilled labour.

“The Union Budget should identify the growth inducers and accentuate its pace to mobilise the sector’s progress. One of the most crucial demands is to accord ‘Industry Status to Real Estate Sector’, which will allow the sector to avail legitimate finances and low-cost loans from banks and other financial institutions,” said Amit Modi, President – CREDAI – Western UP, adding that the cost benefits could then be transferred to the ultimate homebuyers.

Sanjay Sharma, Director of SKA Group too echoed along with others that industry status must be accorded to the real estate sector. “The real estate sector has had a strong resurgence post-Covid 19 and needs government support to keep the momentum going,” Sharma noted.

All said a looming global recession may have direct and considerable repercussions on the Indian commercial office market as it depends considerably on fund inflows by global corporates.

Investments into the Indian real estate sector by private equity firms stood at USD 3.4 billion at the end of 2022, data from property consulting firm Savills India showed.

Moving ahead with the pre-Budget expectations, PL Narayana, CEO and Founder of Nesca Homes says the industry anticipates a combination of measures, including tax breaks, basic infrastructure investment, and credit access.

“The government should prioritise improving road accessibility, developing affordable housing and rental options in both urban and rural areas, and encouraging sustainability and innovation in the real estate sector in this budget for 2023,” said Narayana.

Deviating from some of the above-quoted developers, Rohit Gera, Managing Director of Pune-focused Gera Developments the real estate sector is currently doing well and they need no sops.

“For home buyers though, I wish that the government brings in more relief by raising the income tax deduction on interest paid for homes. The government should definitely work towards making it easier for people to buy homes,” Gera said, adding the only help in the face of the impending headwinds is to protect demand for the sector which he believes will happen only when the government makes home buying more attractive. (ANI)

This report is auto-generated from ANI news service. ThePrint holds no responsibility for its content.

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