Budget 2024-25: What Real Estate Gains from the New Provisions
7/25/2024 12:37:00 PM
Nirmala Sitharaman, minister of finance, presented the union budget 2024-2025 in Lok Sabha on July 23, 2024. Presenting her seventh straight budget, Sitharaman said, India’s
inflation continues to be low, stable and moving towards the 4per cent target. Core inflation (non-food, non-fuel) currently is 3.1 per cent.
She also said this budget envisages sustained efforts on the following nine priorities for generating ample opportunities for all: Productivity and resilience in agriculture, employment &
skiling, inclusive human resource development and social justice, manufacturing & services, urban development, energy security, infrastructure, innovation, research & development
and next generation reforms.
Here is what real estate industry gained from Union Budget 2025-25:
Pradhan Mantri Awas Yojana (PMAY)
Three crore additional houses under the Pradhan Mantri Awas Yojana in rural and urban areas in the country have been announced, for which the necessary allocations are being
made.
Under the PM Awas Yojana Urban 2.0, housing needs of 1 crore urban poor and middle-class families will be addressed with an investment of Rs 10 lakh crore. This will include the
central assistance of Rs 2.2 lakh
crore in the next 5 years. A provision of interest subsidy to facilitate loans at affordable rates is also envisaged.
Transit Oriented Development
Transit oriented development plans for 14 large cities with a population above 30 lakh will be formulated, along with an implementation and financing strategy.
Rental Housing
In addition, enabling policies and regulations for efficient and transparent rental housing markets with enhanced availability will also be put in place.
Rental housing with dormitory type accommodation for industrial workers will be facilitated in PPP mode with VGF support and commitment from anchor industries.
Stamp Duty
FM said that centre will encourage states which continue to charge high stamp duty to moderate the rates for all, and also consider further lowering duties for properties purchased by
women. This reform will be made an essential component of urban development schemes.
Land-related reforms by state governments
Land-related reforms and actions, both in rural and urban areas, will cover (1) land administration, planning and management, and (2) urban planning, usage and building bylaws.
These will be incentivized for completion within the next 3 years through appropriate fiscal support.
Rural Land related actions
Rural land related actions will include (1) assignment of Unique Land Parcel Identification Number (ULPIN) or Bhu-Aadhaar for all lands, (2) digitization of cadastral maps, (3) survey
of map sub-divisions as per current ownership, (4) establishment of land registry, and (5) linking to the farmers registry. These actions will also facilitate credit flow and other
agricultural services.
Urban Land related actions
Land records in urban areas will be digitized with GIS mapping. An IT based system for property record administration, updating, and tax administration will be established. These will
also facilitate improving the financial position of urban local bodies.
Cities as Growth Hubs
Working with states, our government will facilitate development of ‘Cities as Growth Hubs’. This will be achieved through economic and transit planning, and orderly development of
peri-urban areas utilizing town planning schemes.
Creative redevelopment of cities
For creative brownfield redevelopment of existing cities with a transformative impact, our government will formulate a framework for enabling policies, market-based mechanisms and
regulation.
Long term capital gains
Long term gains on all financial and non-financial assets, on the other hand, will attract a tax rate of 12.5 per cent. For the benefit of the lower and middle-income classes, FM
proposed to increase the limit of exemption of capital gains on certain financial assets to Rs 1.25 lakh per year.
Andhra Pradesh capital
Central government has made concerted efforts to fulfil the commitments in the Andhra Pradesh Reorganization Act. Recognizing the state’s need for a capital, we will facilitate special
financial support through multilateral development agencies. In the current financial year Rs 15,000 crore will be arranged, with additional amounts in future years.
National Company Law Tribunals
The IBC has resolved more than 1,000 companies, resulting in direct recovery of over Rs 3.3 lakh crore to creditors. In addition, 28,000 cases involving over Rs 10 lakh crore have
been disposed of, even prior to admission.
Appropriate changes to the IBC, reforms and strengthening of the tribunal and appellate tribunals will be initiated to speed up insolvency resolution. Additional tribunals will be
established. Out of those, some will be notified to decide cases exclusively under the Companies Act.
PM Surya Ghar Muft Bijli Yojana
In line with the announcement in the interim budget, PM Surya Ghar Muft Bijli Yojana has been launched to install rooftop solar plants to enable 1 crore households obtain free
electricity up to 300 units every month. The scheme has generated remarkable response with more than 1.28 crore registrations and 14 lakh applications, and we will further
encourage it.
Industrial Parks
Our government will facilitate development of investment-ready “plug and play” industrial parks with complete infrastructure in or near 100 cities, in partnership with the states and
private sector, by better using town planning schemes, said Sitharaman.
Twelve industrial parks under the National Industrial Corridor Development Programme also will be sanctioned.
Here is how real estate industry reacted to Budget 2024-25:
Reducing the holding period for long-term capital gains from 36 to 12 months puts us at par with listed equity shares, further popularizing the REIT asset class in India. This move will
further enhance the attractiveness of the REIT product, increasing investor participation.
Aravind Maiya, chief executive officer, Embassy REIT
The government's step towards digitizing India's archaic land documentation system is a game-changer, as transparent and accessible land records facilitate property transactions,
reduce disputes, and encourage investment, benefiting both the real estate sector and the broader economy. However, some critical aspects remain unaddressed, such as GST
rationalization for the real estate industry and the long-standing demand for industry status, which would facilitate access to funding.
Murali Malayappan, chairman & managing director, Shriram Properties
The increase in the affordable housing deduction for interest paid on loans is a positive change that will provide much-needed relief to homebuyers and boost the real estate market.
Venkatesh Gopalakrishnan, director Group Promoter’s Office, MD & CEO - Shapoorji Pallonji Real Estate (SPRE)
The comprehensive focus on efficient urban planning, including transit-oriented development and enhanced infrastructure for water supply, sewage, and waste management across
100 large cities, will elevate the quality of urban living.
Ashwin Sheth, chairman and managing director, Ashwin Sheth Group
Taking into consideration the popularity of hybrid working, the budget could have met a few expectations of coworking sector – particularly lower GST rate for small-scale coworking
clients and the establishment of the single-window clearance system. An important requirement for the coworking industry has also been Lower/Concessional rate of TDS which will
improve the working capital.
Manas Mehrotra, founder, 315Work Avenue
The development of industrial parks in 100 cities under the Industrial Corridor initiative is expected to create new real estate opportunities in these areas, potentially leading to the
growth of commercial and residential properties.
G Hari Babu, national president, NAREDCO
The abolition of angel tax and reduction of corporate tax on foreign companies are particularly encouraging for start-ups and Global Capability Centers (GCCs), all of which have been
big drivers of commercial real estate demand.
Anshul Jain, chief executive - India, SE Asia & APAC Tenant Representation, Cushman & Wakefield
We were expecting the announcements related to the fund outlay for Smart City Mission 2.0. The plan to develop TOD in 14 large cities will also definitely help in creating industrial
and commercial hubs in these catchment areas. Digitalization of Land records in urban areas with GIS mapping will increase the transparency and provide the better administrative
services.
Pradeep Misra, chairman & MD, Rudrabhishek Enterprises
The budget has also given ample attention to urban and rural development, with rental housing for industrial workers through the PPP model, interest subsidies for rental housing, and
Transit-Oriented Developments.
Anurag Mathur, CEO, Savills India
The union budget 2024 however has not addressed some of the key demands of the real estate sector, including granting of industry status, input tax credit, reduction of GST and
single window clearance. Additionally, there is only a marginal increase in savings on individual income tax under the new taxation regime. We urge the union government to
reconsider the focus on the real estate sector to include these demand.
Pavitra Shankar, managing director, Brigade Enterprises
Innovative initiatives such as the digitization of land records, GIS mapping, and urban housing for the middle class, combined with workforce skilling, are expected to have a profound
multiplier effect on the burgeoning real estate sector, currently experiencing double-digit growth. Moreover, the budget’s focus on sustainable development through solar and
renewable energy, water and solid waste management aligns perfectly with the goal of climate-resilient real estate development.
Niranjan Hiranandani, chairman, Hiranandani Group
Mega allocation for the Hyderabad-Bengaluru industrial corridor and Vizag-Chennai corridor will boost growth along these corridors and consequently boost real estate growth there.
Anuj Puri, chairman, ANAROCK Group
We commend the Union Budget 2024-25 for its comprehensive approach towards job creation and boosting consumption, which are positive developments for the real estate sector.
Prashant Sharma, president, NAREDCO Maharashtra
The budget falls short of addressing the industry's core challenges. The sector requires a more supportive policy framework, including industry status, GST relief, and streamlined
approvals.
Source : The Economic Time
INDIA
