As the Union Budget 2024 draws near, anticipation is building within Mumbai's real estate sector. Industry leaders are advocating for several policy changes aimed at boosting demand, supply, and sustainability in this vital market. Here are the key expectations:
1. CLSS Revival: The real estate sector is calling for the revival of the Credit-linked Subsidy Scheme (CLSS) under the Pradhan Mantri Awas Yojana (PMAY). This scheme, which expired in 2022, provided subsidies for Economically Weaker Sections (EWS) and Low-Income Groups (LIG) purchasing affordable homes. The revival of CLSS is seen as crucial to stimulate demand among first-time homebuyers and support affordable housing initiatives.
2. Tax Holidays: There is a strong push for reinstating the 100% tax holiday under Section 80-IBA of the Finance Act, 2016. This would provide significant tax relief on profits earned from affordable housing projects, encouraging developers to focus more on this segment and increasing the supply of affordable homes.
3. Revised Affordable Housing Price Cap: Industry experts suggest increasing the price cap for affordable housing from ₹45 lakh to ₹85 lakh in Mumbai and to ₹60-65 lakh in other major cities. This adjustment would align the definition of affordable housing with market realities, allowing more homes to qualify and enabling buyers to access lower GST rates and other benefits.
4. GST Reform: The current GST rate of 12% without input tax credit (ITC) is viewed as a barrier for buyers of under-construction properties. The sector is urging the government to either reduce this rate or reinstate ITC, making under-construction properties more attractive and affordable to buyers.
5. Single-Window Clearance: Introducing a single-window clearance system for all real estate projects could significantly reduce project delays and enhance the ease of doing business. This system would streamline approvals and clearances, minimizing bureaucratic hurdles and expediting project timelines.
6. Enhanced Tax Benefits: The sector is advocating for enhanced tax benefits under Section 24(b) (interest on home loans) and Section 80EEA (additional deduction for interest on home loans for first-time buyers). Increasing the deduction limits under these sections would make home loans more affordable and encourage more investments in the real estate sector, particularly in the affordable housing segment.
7. Sustainable Housing: Promoting green and sustainable housing through tax incentives and subsidies is also high on the wishlist. This approach would address environmental concerns while fostering innovation in the construction sector. Tax rebates for developers adopting eco-friendly practices and incentives for buyers investing in energy-efficient homes could significantly boost sustainable development.
8. Infrastructure Status: Granting infrastructure status to the real estate sector would enable developers to access funds at lower interest rates and avail other financial benefits. This status would streamline regulatory processes and improve overall project viability, making it easier for developers to undertake and complete projects.
The Union Budget 2024 holds significant potential for transforming the real estate landscape in Mumbai and across India. By addressing these key expectations, the government can provide the necessary impetus to drive growth, enhance affordability, and promote sustainable development in the real estate sector.
Stay tuned to the Mumbai Real Estate Blog for more updates on the Union Budget 2024 and its impact on the real estate sector. We will continue to bring you the latest news, trends, and expert insights to help you navigate the ever-evolving real estate market in Mumbai.
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