Budget 2020 Expectations for Real Estate: With the Budget 2020 just a few days away, the real estate sector is betting big on it for revival of its fortunes. The government is focused on transforming the economic scenario of the country. After undergoing a series of reforms, the sector is looking towards the budget in expectation of policies that will give it a boost in the newly-rejuvenated market.
The hope is that the government will kick-start the completion of stuck projects immediately, with special attention to the allocation process of the corpus, in order to improve the buyer sentiment and boost demand.
The budget providing for a 10% income tax exemption on fresh/ new investments for under-construction properties until the occupation certificates are obtained would be a substantial measure in generating demand and the growth of industry, and will also significantly benefit the government through increased volume of GST collections.
Income tax relief from the chargeability of notional rent on fresh/new purchase of under-constructed properties, even if the property remains unrented, is another measure that once implemented, will have a positive impact on the sector. Not only residential, but commercial properties should also be given similar tax benefits. Moreover, to boost the consumer sentiments, the government should consider a higher interest exemption limit for the financial year 2020-21 and additionally for the next 2-3 years. These steps would not only ensure a sizeable increase in transactions but also be beneficial in terms of the consequent GST collection and will increase the demand in allied industries.
Further, a 5-year tax rebate from the date of the handover on the leasing income from all new commercial properties upcoming in the next two years, with a condition that the project is timely completed and put for leasing, will also result in boosting the sector. Similarly, tax rebates on the income from residential property for 5 years from the date of possession where new projects are started and completed within the time bound periods will also have a positive impact. While these measures would ensure the timely completion of projects, they would also help in boosting the demand as developers would be able to pass on these benefits to the consumers.
Recently, the government had announced its target to make India a $5-trillion economy. Moreover, Pradhan Mantri Aawas Yojna aims to provide 20 million homes by the end of year 2022. The real estate sector, being a significant contributor in the country’s GDP, is hopeful that the new budget will come with lucrative measures to boost the growth prospects of the sector.