The Union Budget 2024-25 did take into account the challenges of various sectors. Although, not many conducive measures have been introduced directly to the real estate sector. However, the infrastructure proposals and focus on Pradhan Mantri Awas Yojana (PMAY) are set to positively impact the housing and commercial sectors.
99acres gives a quick Union Budget 2024 summary of what has been offered to the real estate industry.
Major hits of Union Budget 2024
Revision in Income Tax Slabs
In her seventh consecutive budget, Finance Minister (FM) Nirmala Sitharaman announced tax exemptions for individual taxpayers opting the New Tax Regime. These measures are expected to increase consumer spending while stimulating economic growth.
Under the revised tax slabs:
- Standard deduction has been increased to Rs 75,000 from Rs 50,000
- Deduction on family pension for pensioners is revised to Rs 25,000 from Rs 15,000
Below are the tax slabs announced in Union Budget 2024:
| Union Budget 2024: Tax structure to be revised | |
|---|---|
| Slabs | New Income Tax Rates |
| 0-Rs 3 lakh | NIL |
| Rs 3-Rs 7 lakh | 5% |
| Rs 7-10 lakh | 10% |
| Rs 10-12 lakh | 15% |
| Rs 12-15 lakh | 20% |
| Above Rs 15 lakh | 30% |
Budget allocated to build 3 crore additional homes under PMAY 2.0
The budget continues its support for affordable housing initiatives. In her budget speech, FM Sitharaman made a significant announcement of allocating the funds to build around three crore homes in rural and urban areas under PMAY 2.0. This is a positive step towards achieving the government’s ‘housing for all’ mission.
PMAY Urban to cater 1 crore housing needs
With an investment of Rs 10,000 crore under PMAY 2.0, the government aims to provide housing to 1 crore urban poor and middle-class families. Central assistance will also be worth Rs 2.2 lakh crore for the next five years. The plan also proposes interest subsidy to help people obtain loans at affordable rates.
Dharmendra Raichura, VP of Finance at Ashar Group, said, “The Union Budget 2024-25 unveils a visionary blueprint for India's real estate sector. The budget prioritises employment-linked incentives, allocating funds for manufacturing job creation and employer support, ensuring a robust workforce to propel growth. Notably, the unprecedented allocation of Rs 10 lakh crore for urban housing aims to address the needs of 1 crore urban poor and middle-class families marks a significant stride towards sustainable and inclusive urban development.”
Proposal of lower stamp duty
During the budget speech, FM Sitharaman also advised State governments to moderate stamp duty rates to support home buying. She also suggested lowering duties for properties purchased by women.
Mr. Prashant Sharma, President, NAREDCO Maharashtra, avers “The proposal to encourage States to moderate high stamp duty rates and consider further reductions for properties purchased by women is a progressive measure. Incorporating these as essential components of urban development schemes will promote greater inclusivity and accessibility in the housing market.”
Land-related reforms
The government focuses on land-related reforms in both rural and urban areas, which will cover:
- Land administration, planning and management
- Urban planning, usage and building bye-laws
Reforms for rural lands
Rural land-related reforms include:
- Assigning Unique Land Parcel Identification Number (ULPIN) or Bhu-Aadhar for lands
- Survey of map sub-divisions as per current ownership
- Setting up a process for land registry
- Linking to farmer’s registry
- Digitisation of cadastral map
Reforms for urban lands
Land records in urban areas will be digitised via GIS Mapping. It is a tech-based system that streamlines property record transactions, updates and tax administration.
Rental housing
In rental housing, dormitory-type accommodation for industrial workers will be facilitated in Public Private Partnership (PPP) mode with VGF Support.
Dharmendra Raichura, VP of Finance at Ashar Group adds, “Introducing rental housing with dorm-like accommodations for industrial workers under the PPP model demonstrates a strategic approach to tackling urban housing challenges. The budget underscores the government's commitment to fostering urban development with a sustained focus on infrastructure, maintaining a capex outlay of Rs 11.11 lakh crore. This budget presents a clear roadmap towards a developed India by 2047, offering immense opportunities for real estate developers to contribute to and benefit from the nation's progress.”
PM Surya Ghar Muft Bijli Yojana to offer free electricity
Among many announcements, PM Surya Ghar Muft Bijli Yojana grabbed attention. Under this scheme, the government plans to install rooftop solar panels to enable one crore households obtain free electricity for up to 300 units monthly.
Key misses observed in the Union Budget 2024
While the Union Budget 2024 addressed several expectations of the real estate sector, some of them could not make it to the list. These include:
Goods and Services Tax (GST) reduction
The reduction in GST on raw material procurement for construction activities and the GST rebate on renting income that was most talked about by realty players found no mention in the Union Budget 2024.
No respite for homeowners
The Union Budget 2024-25 disappointed homeowners by not addressing key expectations. This includes the much-anticipated distinction between principal and interest repayment slabs for home loans. Homeowners currently can claim a deduction on their principal repayment under Section 80C, but it's capped at Rs 1.5 lakh annually and comes with the condition that the property must not be sold within five years of possession.
Industry status
Providing the real estate sector with the 'Industry' status would have assisted it in attracting equity investment for refinancing its debts, and obtaining loans at lower interest rates. Despite being a long-pending request of the sector, it has not been addressed in the Union Budget 2024-25.
The government has provided much-needed capital expenditure for the country's transport infrastructure. However, it could have given additional attention to a few aspects. These include addressing inflation for the mid-segment homebuyers, single window clearance, redefining affordable housing and tax relaxations on home loans and an industry status to the sector.
See our latest webstory on Union Budget 2024-25: Check Out the Hits & Misses This Year
