Budget 2025: Real Estate Sector Seeks Industry Status, Single-Window Clearance, and Tax Reforms
By: Admin
Date: January 14, 2025
Category: Budget 2025-26
Reading Time: 4 Minutes
The real estate sector has pinned its hopes on the Union Budget 2025, seeking long-awaited industry status and various reforms to drive growth, streamline operations, and boost demand.
Key Expectations from Budget 2025
1. Granting Industry Status
One of the primary demands is the recognition of real estate as an industry.
- Benefits of Industry Status:
- Unlock institutional financing.
- Reduce borrowing costs.
- Improve transparency.
- Broader Impact:
- This recognition would have a multiplier effect on over 200 allied industries.
- It could stimulate job creation and boost economic activity, according to the Chairman of Signature Global.
2. Implementing a Single-Window Clearance System
Developers have consistently emphasized the importance of a streamlined approval process.
- Advantages of Single-Window Clearance:
- Save time in obtaining project approvals.
- Reduce delays and inefficiencies in project execution.
3. Introducing Tax Reforms and Financial Relief
Tax reforms could play a vital role in stimulating demand and providing much-needed relief to the sector.
- Increased Tax Deductions:
- The sector is requesting an increase in the income tax deduction limit on housing loan interest from ₹2 lakh to ₹5 lakh under Section 80C.
- This measure would make homeownership more accessible for middle-class buyers.
- GST Input Tax Credit Revisions:
- Revising GST input tax credit rules could ease developers’ tax burdens.
- This could stabilize property prices, making housing more affordable.
- Fiscal Incentives for REIT Investors:
- Offering tax incentives under Section 80C for REIT investors would encourage investments in the sector.
4. Strengthening Affordable Housing Initiatives
Support for affordable housing remains a critical focus area.
- Restoring Interest Subvention:
- Interest subvention under PMAY for loans up to ₹6 lakh and a fixed interest rate of 5% for loans up to ₹25 lakh would significantly boost affordable housing.
- Proposed Subsidy for Housing Loans:
- A ₹5 lakh subsidy for housing loans up to ₹1 crore has been proposed to provide financial relief.
5. Addressing Capital Gains Tax Issues
Capital gains tax reforms are another key area of interest.
- Proposed Changes:
- Lifting the ₹10-crore cap on capital gains tax exemption.
- Introducing a uniform long-term capital gains tax across all asset classes.
Sector Challenges and Opportunities
The real estate sector faces a mix of challenges and opportunities that require targeted reforms:
- Rising Costs:
- Increasing property prices and construction costs necessitate greater financial support and tax exemptions.
- Demand in Smaller Cities:
- Reduced GST on construction materials could stimulate demand in Tier 2 and Tier 3 cities.
- Strategic Reforms Needed:
- Simplifying regulations.
- Providing liquidity support to developers.
Broader Economic Impact
Experts believe that recognizing real estate as an industry and implementing these reforms would:
- Boost Investor Confidence: This recognition would encourage both domestic and international investments.
- Strengthen India’s Position Globally: Transformative measures could position India as a leading investment destination.
- Foster Demand Across Segments: Increased demand in residential, commercial, and office spaces would drive economic growth.
Conclusion
The real estate sector is optimistic about Budget 2025, anticipating reforms that will address its challenges and unlock its true potential. With the Union Finance Minister set to present the budget on February 1, 2025, stakeholders hope for measures that will support sustainable growth and benefit developers, homebuyers, and investors alike.
