Budget 2024: A Game-Changer for Real Estate?

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 Imagine waking up to the dawn of a new fiscal year, a year filled with anticipation and potential. There is that enthusiasm that comes with the anticipation of the next thing; this is following the expectation of the government to release its budgetary plan for the fiscal year.
 Picture the scene: ministers and officials meeting and deliberating, economists analysing data, and people waiting for information that can affect virtually all aspects of their existence.
 Of all the business fields, this annual financial statement is quite valuable for the field of real estate. It’s the nerve that is responsible to give life to the sector through sponsoring land-hearths, sponsoring investors’ confidence, et cetera. Thus, as the government promises investments in infrastructures and implementing favourable conditions for housing, the real estate responds willingly but hesitantly.

 

 Yet, the problem is not that simple as there are negative impacts of budget on Real Estate too. The budget also has its shades, those regions where the dreams of many might be confronted. Interest rates may fluctuate, subsidies may occur in inadequate number, and market stability may be posed. Every decision that is made in the budget room echoes into construction sites and even extents to the homes of plain citizens.


 
 Therefore, there is much to learn about this rather complex relationship between government policies and the real estate market. To start with, we will discover the rise and fall, anticipate and disappointments, and find out how this year’s budget may form the physiognomy of out cities and towns. However, the budget intrinsically affects all of us wherever we belong, whether a homeowner, an investor, or a person who just has a dream of having a home of their own.


 

 <h2 style="font-size: 18px; ">Budget's Big Bet on Real Estate</h2>
 
 Under this let’s check out the positive impact of the budget on real estate.
 People with tight budgets often have to take out loans to build their future assets. Hence affordable loan are a crucial factor that needs to support real estate sector
 

 1. Affordable loan:-
 

 
 On the reduction in loan rates, the budget emphasised the importance of affordable housing initiatives and infrastructure development, which collectively support lower interest rates and easier access to housing loans. This approach is expected to encourage more people to invest in real estate, thus driving the market's growth.


 An important item in the government’s expenditure is infrastructural development where billions of US dollars have been proposed in the next five to ten years.

 

 2. India's Infrastructure Revolution
 
 

 <h2 style="font-size: 18px; ">Central Government Initiatives:-</h2>

 The actual budgetary support by the central government for capital expenditure has been kept at Rs 11,11,111 crore which is roughly about 3. About $17, 5 cent or 4 percent of our GDP. This capital exhibit is believed to create a very high multiplier effect which will stimulate growth of the economy in the different sectors. In this regard, infrastructure affects the provision of power base of ongoing economic development by the government.
 

 State Government Support:-

 
 Besides, to support infrastructure, state governments are supposed to match the central government’s expenditure. Such a relationship is beneficial because it guarantees the co-ordinated and integrated implementation of the infrastructure, including the most hard-to-reach regions of the country. It has also given one billion rupees this year’s budget to set up the new social unit. Rs 5 lakh crore for their long-term non-interest bearing credit needs to help resource mobilisation by the states.
 
 3. Disposable Income Boost
 
 To a large extent, the budget maintains the concentration on employment, generation of skills, and adjustments in slabs of income tax on personal income increasing the LIMIT OF EXEMPTION to ₹7 lakh. This is expected to enhance disposable income especially in the purchasing of houses, it will most benefit the middle-class housing sector as people would be able to afford to invest from their disposable income.
 
 4. Rental Reforms Push
 

 New provision has been added under which a 5% TDS must be deducted for any such income which is more than ₹50,000 per month. This measure will ensure that property owners, primarily the ageing people, get to have more rentals as well as a legal way of doing it.
 
 5. LTCG Simplification
 

 The budget relieves the complexity of the Long Term Capital Gains (LTCG) Tax by cutting down its rate from 20 % to 12 %. 5%. This simplification will perform the purpose of promoting more investments in real estate since results of financial real estate transactions are less opaque and may be more lucrative.
 

 6. Mega Push to Housing
 

 An investment promotion of ₹10 lakh crore under the PMAY 2. 0 has the vision of building 3 Crore houses for the middle class income group of the society. This expansion and improvement of more PMAY subsidies will go far in greatly enhancing affordable housing projects.
 

 7. Stamp Duty Rationalization
 
 It is noted that attempts towards the process of the stamp duties rationalisation means a reduction in the transaction costs, which is a step forward to enhance property transactions accessibility and efficiency.
 
 8. The Effect on Tier-2 and Tier-3 Internet Connectivity
 
 A capital expenditure on the Railroad can be done to the tune of ₹ 2. 65 trillion to enhance connectivity to bolster the real estate prospect in tier-II and tier-III cities and towns as investment epicentres.
 
 9. Smart Cities Mission Extension
 
 The extension of the Smart Cities Mission up to March 2025 and ₹38,000 crore will help in the urban development of the country & in-turn real estate sector due to provision of sustainable cities.
 
 Budget Bites Back
 
 Under this let’s check out the negative impact of the budget on real estate.
 

 1. Personal Income Tax Incentives
 
 Nevertheless, the latest changes in the tax rates in terms of adjustments in the slabs and the increment in the standard deduction do not fit the bill of the middle class taxpayer in terms of inflation. This shortfall lowers expenditures or discards more income that is available for home ownership.
 
 2. The changes in the tax on LTCG affected the investment sentiment.
 
 The fall in the LTCG tax rate is quite significant however, the lack of indexation benefits might negate the same and will deter the investors.
 
 3. TDS Disincentive
 A newly introduced TDS provision of 1% is directly payable on the purchase price of property in case of transactions where the sale consideration is more than ₹50 lakh making the process daunting and possibly dissuasive.
 
 4. The current housing situation does not encourage affordable housing developers
 
 The budget insufficiency does not tackle the supply and demand problems of cheap and affordable homes. Now, there are no new incentives to encourage the developers for affordable housing projects which is a major drawback.

 5. There is no progress in the Single Window Clearance.
 
 One of the key issues as it stands is the sector’s unabated search for a one-stop-shop clearance for approvals across the length and breadth of the real estate business, which continues to slow down project implementation.
 
 6. Certainly, it was none other than The Real Estate Industry that was lacking the ability to claim status of its own.
 
 Some of the demands like the one for industry status, which would help in getting the necessary finance and be advantageous to the sector, have remained unmet. This remained as one of the causes that has persisted to complicate the sector and hinder its growth and stability.
 
 7. There is no Expansion of the Domain of Affordable Housing
 
 Despite frequent discussions of high property prices, the budget does not deepen affordable housing promoting measures. It does not take into consideration the demand for additional basic homes for the people.
 
 8. Currently, there is a need to boost the funding arrangements for the stressed projects.
 
 There is no provision for fulfilling the funding gaps of the stalled projects which are a key strategy for the timely delivery of new developments.
 
 9. Decision to not increase in Tax Allowance on Home Loan
 
 With regards to home loans though, the budget does not provide for any relief to the tax-exemption limit for interest on the loan amount to boost affordability buoyed by rising property prices.
 

 
 Conclusion
 
 

 The Budget FY 25 has been positive and negative for the real estate sector both together. Even though several endeavours remain committed to progress and development, there is the question of what has not yet been considered. It remains to be seen how these hits and misses will unfold in the near months and what actions and reactions will happen in the real estate companies.
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