The recently announced Union Budget 2023-24 could be a watershed moment for the real estate industry. Hon’ble Finance Minister, Nirmala Sitharaman has announced multiple measures that are likely to benefit the sector and offer future opportunities in the Budget 2023. Recently, on the 1st of February, the finance minister presented the fifth Union Budget 2023 The budget, which announced measures of growth and progress, was built on the foundations of Amrit Kaal, a 25-year plan to transition India from 75 to 100 years of independence, which had been announced last year. Though several critical factors announced will have a direct impact on the real estate sector, let us examine the main key points from Budget 2023 and assess their impact on real estate developers.
While the Real Estate Industry hasn’t been given major importance in proportion to the expectations set in the budget 2023, There still have been a few favourable measures announced that would act as a catalyst for positive progress in the realty sector, let’s have a look at a few of them below.
A Much-Needed Economic Boost:
The Finance Minister forecasts 7% economic growth for fiscal years 2023-24. More development would be seen across the country with a planned capital expenditure of Rs 10 lakh crore, a YoY increase of 33%, attracting more investors. This would improve cash liquidity in the market, benefiting the real estate sector.
Promoting Affordable Housing:
The Union Budget 2023-24 includes a Rs 79,000 crore commitment for PMAY houses. This represents a 66 percent increase over the previous year giving a required boost for affordable housing. The funds will be used to expand the supply of low-cost housing under the Pradhan Mantri Awas Yojana. Promoting affordable housing is one of the greatest benefits the realty sector could get from the 2023 budget.
An Upgrade for Infrastructure:
Real Estate heavily depends on connectivity and proximity to transport systems like airports, railway and bus stations, and other such infrastructural development. This year’s budget for 2023 includes plans to upgrade 50 airports and ports. The Infrastructure Finance Secretariat will promote private investment in projects such as urban infrastructure development, power, roads, and railways.
The expansion of National Highways was announced in last year’s Budget to exceed 25,000 km. A coordinated strategy for developing cargo terminals and motorways, as well as other infrastructure, was proposed under PM Gati Shakti.
Expectations That Were Not Met:
The realty sector had set expectations from the budget like a tax break on home loan interest and principal repayment, but the budget made no mention of increasing the limit of home loan interest deduction on income tax returns or anything remotely related to it offering a solution for the sector.
The industry had also expected waivers or reduction of GST on raw materials like cement, steel that would have inflated the real estate sector. The deduction from capital gains on residential property investment has been capped at Rs 10 crore under sections 54 and 54F, which may have a negative impact on high-value investments. According to CREDAI raising the income tax limit for the middle class would have boosted housing demand.
The Budget 2023 may not have a direct impact on real estate development in regards to the expectations and aspirations put down by developers but it for sure has brought in changes that would indirectly help the sector. Things like a boost for infrastructure, changes, and extensions in the rebate for personal income tax for salaried employees are also one of the key benefits for home buyers looking to invest in real estate with affording of home loans being simplified and more. These steps are taken to offer the essential push to the real estate sector and for home buyers and investors for even more simplified realty investment experience.