Union Budget 2024: A Missed Opportunity For Real Estate Sector

The Union Budget 2024 has presented a mixed bag for the real estate sector. While we applaud the government's ambitious plans for infrastructure development and job creation, the budget falls short in addressing the sector's core concerns. The allocation of Rs 2.2 lakh crore for affordable housing is a step in the right direction. It aligns with the government's vision of providing ‘Housing for All’ under the Pradhan Mantri Awas Yojana.

We would have liked the cap to be lifted out on the 45 lakhs in affordable housing and revert back to the earlier parameter which was only based on the carpet area like 60sqm for Bangalore and other metro cities

We all know that Real Estate is a critical pillar of the economy, contributing significantly to GDP with its multiplier effect be it employment generation, business to all allied industries that supply materials and over all infrastructure development. The industry has been persistently advocating for granting industry status to real estate. This would bring the sector at par with other organised sectors, enabling easier access to credit, and attracting investments. Unfortunately, the budget remains silent on this crucial demand.

Moreover, the absence of GST Input Tax Credit for real estate developers is a major setback. This has a cascading effect on the entire value chain, leading to higher costs and reduced affordability. A reduction in GST rates would have also provided a much-needed boost to consumer demand.

The government's focus on the new tax regime with marginal tax benefits is commendable. However, the Govt has maintained status quo on the deductions toward interest on home loans which is just 2 lakhs, something that could have been increased. The industry has been emphasising the need for a single window clearance system for real estate projects. This would streamline approvals, reduce project timelines, and enhance investor confidence, the budget, however, does not address this critical issue.

We urge the government to reconsider its stance on the real estate sector. By granting industry status, providing GST Input Tax Credit (GST-ITC), rationalising GST rates especially on cement which is at 28 per cent. The real estate sector is optimistic about the country's growth trajectory under the leadership of our Prime Minister and is committed to playing a pivotal role in achieving the government's vision of a ‘New India’. We look forward to working closely with the government to address the sector's challenges and create a conducive environment for sustainable growth.