As we enter a new fiscal year, all eyes in the real estate industry are fixed on the Union Budget for 2024.
This eagerly awaited annual financial event has the power to shape the direction of the realty sector, with industry players anticipating policy interventions, incentives, and reforms.
This detailed analysis explores the expectations for the Real Estate Budget 2024, examining the industry’s hopes and the possible impact on housing, development, and affordability.
What is the Real Estate Budget?
The real estate budget is a vital component of the national budget, designed to address the specific challenges and opportunities within the real estate sector.
This budget section allocates resources, outlines policies, and introduces reforms to promote growth, affordability, and sustainability in the real estate and housing markets.
Components of Real Estate Budget –
- Tax Regulations: Policies related to property transactions, capital gains, and home loans often see adjustments to influence market dynamics.
- Subsidies and Incentives: Financial incentives that are crucial to encourage affordable housing projects and stimulate demand in the market.
- Infrastructure Allocations: Funds for urban development and infrastructure projects are integral to the real estate budget.
- Policy Reforms: The budget may introduce reforms to simplify regulations and streamline processes within the realty sector.
Annual Announcement of Real Estate Budget:
The real estate budget is integral to the Union Budget presentation every year. Usually held at the beginning of the year, the Union Finance Minister reveals a financial blueprint designed exclusively for the real estate sector.
In this presentation, policies, allocations, and reforms addressing issues and opportunities within the real estate industry are outlined.
The Finance Minister’s speech, based on industry inputs, economic assessments, and consultations, establishes the tone for the fiscal year, influencing investment decisions and market trends.
It demonstrates the government’s commitment to shaping the path of the real estate sector for the upcoming year.
A Recap of 2023:
Let’s take a moment to revisit the key announcements made in the 2023 budget before we look into the expectations for 2024.
The budget presented by the Union Finance Minister aimed to establish a solid foundation for infrastructure and real estate development.
- PM Awas Yojana Budget Saw a Remarkable Surge: The budget for PM Awas Yojana was increased by a remarkable 66%, reaching a total of ₹79,000 crore, to promote the development of low-income and affordable housing across the country.
- Capital Gained Policy Shift: A policy shift regarding capital gains placed a cap on the deduction from capital gains on residential property investments at 10 crores. This move limited the income tax exemption from revenues of valuable insurance policies.
- Urban Infrastructure Development Fund (UIDF): The introduction of the Urban Infrastructure Development Fund (UIDF) was expected to encourage private investment in urban infrastructure, likely to boost growth in Tier 2 and Tier 3 cities and influence real estate demand.
- Infrastructure Finance Secretariat: Creating an Infrastructure Finance Secretariat was a crucial initiative aimed at facilitating private investment in infrastructure, enabling the leveraging of resources for real estate development.
Anticipating 2024: Key Expectations
- Increase in Tax Rebate for Home Loans: Expectation of an increase in tax rebate on home loan interest rates, aiming for at least ₹5 lakh under Section 24 of the Income Tax Act to boost demand in the budget homes segment.
- Revival of Affordable Housing Benefits: The revival and extension of benefits, including tax breaks, to incentivize developers to construct more affordable housing. This will be crucial for revitalizing a segment that witnessed a decline in sales in recent years.
- Adjusting Qualifying Standards for Affordable Housing: Adjusting the qualifying cost of properties within city affordable housing segments, aligning them with market realities to enhance affordability and broaden the reach of government subsidies and reduced GST rates.
- Release of Government Land for Affordable Housing: The release of certain lands owned by entities like Indian Railways and Port Trusts at a low cost, specifically for affordable housing projects, addressing the critical issue of land shortage and potentially reducing overall real estate prices.
The 2024 Union Budget is expected to benefit the real estate sector with tax reforms, affordable housing incentives, and demand-boosting initiatives.
Key expectations include increased tax rebates for home loans, the revival of affordable housing benefits, and the release of government land for affordable housing.
These measures could potentially transform the real estate sector, paving the way for a brighter future ahead.