Real estate industry wants budget help to sustain recovery

The real estate sector has seen a revival in demand in the last few quarters despite the ongoing Covid-19, benefiting from low interest rates and reasonable property prices. State governments pitched in with stamp duty reductions while developers offered incentives and discounts to homebuyers.

The industry wants government support to sustain the recovery in the sector that is the second
largest employment creator after agriculture and contributes around 6% to India’s gross domestic product (GDP). The industry wants rationalisation of taxes and certain tweaks in the definition of affordable housing among other measures.

PERFORMANCE ACROSS TOP 8 CITIES IN 2021

Housing

• Sales: 2.33 lakh units, up 51% year-on-year
• Supply: 2.32 lakh units, up 58%
• Mumbai residential sales scaled new peak
• Hyderabad, Pune, Bengaluru saw highest percentage growth in sales

OFFICES

• Total leasing: 38.1 m sq ft, almost same as 2020
• Nearly 68% of leasing took place in second half of 2021
• Bengaluru leads leasing activity
• New offices completion: 39 million sq ft

BUDGET RECOMMENDATIONS
1) Raise home loan interest deduction for tax rebate to Rs 5 lakh from current of Rs 2 lakh

2) Enhance affordability housing limits

• Rs 75 lakh in non-metro cities, Rs 1.50 crore in metros from current Rs 45 lakh
• Apartment size to 90 sq m in metros, 120 sq m in non-metros from 60 sq m and 90 sq m, respectively

3) Extend Credit Linked Subsidy Scheme (CLSS) under Pradhan Mantri Awas Yojana for middle income groups until December 31, 2022

4) Offer tax exemption to investments in REITs starting with Rs 50,000

5) Allow tax-neutral business consolidation through merger or amalgamation to push rescue of stalled housing projects helping troubled homebuyers

6) Tax long-term capital gains on capital assets at 10% and holding period to be reduced to 12 months