Union Budget 2024: Realtors Want Industry Status, Removal of Capital Gains Tax

Union Finance Minister Nirmala Sitharaman will present the first full-year Budget of the Modi 3.0 government on July 23, 2024. All eyes are set on what the finance minister will present for everyone including the real estate sector. However, real estate developers unanimously believe that significant transformation and radical changes within the real estate sector is necessary to achieve a fivefold increase in India’s economy and contribute to transition from a $250 billion to a $1 trillion economy.

Samir Jasuja, founder and CEO of PropEquity, said that in order to achieve a $1 trillion real estate economy, a series of radical reforms have to be taken in order to achieve the desired target. Citing an example, he said Dubai registered sales of Rs 12,86,880 crores in the real estate sector being an area of merely 35 square km i.e. half the size of South Mumbai (70 square km). The prime catalyst for such kind of induced growth are the real estate laws in Dubai, namely No Capital Gain Tax, No Tax on Property Rental income and No Tax on Property Purchases.

“Removing capital gains tax on real estate would eliminate the tax paid on profits from selling property. This could boost real estate transactions, increase liquidity, and potentially lower housing costs,” Jasuja said.

He added that adding it would be beneficial for homeowners if rental income could be directly offset against home loan EMIs. This policy change would alleviate the double taxation burden on property owners. Such a measure is anticipated to stimulate real estate transaction. Reducing GST rates could potentially decrease overall housing costs.

Rationalisation of GST remains a popular wish that developers want the finance minister to fulfil in order to lead the sector into a new era.

Mohit Malhotra, founder & CEO of NeoLiv, said, “Our expectations are shaped by our understanding of the expanding middle-income group and its housing needs. One of its critical aspects is the proposal concerning input tax credit under GST. Providing developers access to input tax credit is not just a financial incentive but a strategic measure that can boost sectoral growth for homebuyers and drive economic recovery.”

The sector’s long-standing demand of single window clearance and industry status, they believe, will provide the much-needed transparency and speed up project execution cycle.

Vivek Singhal, CEO of Smartworld Developers, said, “The industry seeks a favourable industry status for the housing sector and emphasizes the necessity of maintaining single-window clearance for housing projects, both of which continue to remain significant this year. There is optimism surrounding anticipated policy changes, such as potential reductions in Goods and Services Tax (GST) rates and efforts to reconcile material prices.”

Angad Bedi, MD, BCD Group, said, “The government should look at strengthening the regulations around the sector including RERA, single window clearances for all approvals and swifter resolution of stuck projects to accelerate the sector’s growth. These initiatives along with greater public and private investments in infrastructure, attracting higher foreign direct investment and promoting emerging sectors of real estate such as student and senior living will significantly contribute to the expansion of the sector. We are hopeful of the finance minister addressing the needs of this fast growing industry and recognise its pivotal role in India’s growth saga.”

Vijay Harsh Jha, founder and CEO, VS Realtors (I) Pvt Ltd, a Gurugram-based property brokerage firm, said, “The government should raise the deduction limit for interest payment on home loans from the existing Rs 2 lakh a year to Rs 5 lakh, which will add momentum to housing demand. This is especially crucial given the substantial rise in housing prices and mortgage rates over the past 1-2 years.”