Impact of Union Budget 2021 on the Real Estate Sector
February 9, 2021|Posted in: real estate
Being the first budget since the lockdown the real estate had some gains and losses. The Budget 2021 has set aside Rs 54,581 crore for the Ministry of Housing and Urban Affairs. With this move the Government of India has given priority for ‘Housing for All’, that too affordable housing. The prime real estate portal for buying luxury apartments in Kerala, luxurykeralaflats.com brings to you an insight on the impact of Union Budget 2021 on the Real Estate Sector.
Gains for the real estate sector
Increase in safe harbor limit for primary sale of residential units – The budget has proposed to increase the safe harbour limit from 10% to 20% for the specified primary sale of residential units. This comes as an incentive for home buyers and real estate developers to elevate sales and boost the real estate sector.
Affordable Housing – In the previous budget of July 2019, the government provided an additional deduction of interest, amounting to Rs 1.5 lakh, for loan taken to purchase an affordable house. In this budget the Finance Minister has proposed to extend the eligibility of this deduction by one more year, to March 31, 2022. So, for the purchase of an affordable house, the additional deduction of Rs 1.5 lakh shall therefore be available for loans taken up till March 31, 2022.
Apart from that, to keep up the supply of affordable houses, FM proposed that affordable housing projects can avail a tax holiday for one more year – till March 31, 2022.
Affordable Rental Housing for migrant workers was also considered in this budget. The Finance Minister, Nirmala Sitharaman proposed to allow tax exemption for notified Affordable Rental Housing Projects.
REITs – The FM provided stimulus to REITs and InvITs with the exemptions on TDS (tax deducted at source) as a futuristic move for the real estate sector. The Finance Minister further proposed to sanction the entry of foreign portfolio investors into debt financing of REITs and InvITs. This will make REITs and InvITs a more profitable investment for the common man. This could make it easier to bring more private participation and flow of funds into the real estate and infrastructure sector.
Infrastructure – In 27 cities of India a total of 702 km of conventional metro is operational and another 1,016 km of metro and RRTS is under construction. The central government proposes to fund the development of the Metro rail system further. Two new technologies i.e., ‘MetroLite’ and ‘MetroNeo’ are proposed to be deployed in Tier-2 cities and peripheral areas of Tier-1 cities. This move could provide metro rail systems at much lesser cost with the same experience, convenience and safety. This could boost the real estate sector with the increased connectivity.
Overall, the impact of Union Budget 2021 on the Real Estate Sector has been beneficial. We hope that the government will announce more as stimulus measures in the near future.