The industry was expecting more concrete announcements to promote foreign investments, boost domestic spending, boost job creation and increased disposable income.
Positives for the real estate sector include extension of INR 1.5 lakh additional deduction by 1 more year for affordable housing, tax holiday for affordable housing extended by one more year and new tax incentives for affordable rental housing for migrant workers. The creation of a professionally run development financing institution and the creation of an asset reconstruction company for stressed assets will also have spill over benefits for the real estate sector. The government’s new divestment targets and the announcement that divestments already announced to be completed by 2022 will also help the sector as prime real estate owned by the public sector will come into the market for development. No new tax burden including covid tax, wealth tax and no hike in corporate and personal income tax were again welcome moves.
Negatives include no mention of allowing 100% FDI in completed residential projects, no announcement of more funds under SWAMIH, no concrete steps to increase disposable income of homebuyers, no mention of setting up of a single window clearance system for approvals, not allowing GST input tax credit for under construction projects, no reduction in GST on building materials, not incentivising state governments to rationalise stamp duty and no concrete announcement with regards to making more credit available for the real estate sector. Also the industry was expecting more concrete announcements to promote foreign investments, boost domestic spending, boost job creation and increased disposable income.
Ramesh Nair is a real estate industry veteran and former CEO of JLL India.