The budget for the fiscal year 2023-24 is out, and as expected, it’s trending. The pandemic halted real estate development for some time, but the industry is ramping up again. It’s bigger and better.
With a massive 35.4% increase, this year’s budget will significantly impact various industries, from automobiles to real estate, boosting the economy and delivering progress. An added Rs. 7.5 lakh crore promises growth and benefits the housing and real estate sector. Overall, the budget aims to boost private investments which can lead to increased job creation and growth.
Highlights of Budget 2023-24 for the Real Estate Industry
Increased Budget for PM Awas Yojana
There is a significant increase proposed in the budget for PM Awas Yojana by 66%, bringing it to over 79,000 crores. The PMAY scheme has helped numerous families secure proper housing and will continue to do so.
Tax Exemptions
Deductions from capital gains on residential property investment are capped at ten crores. It will limit the income tax exemption from the revenues of valuable insurance policies.
Changes in Capital Gains Calculation
The finance minister proposed changes in the guidelines for calculating capital gains in cases of joint property development to include money received in cheques or other payments. There will also be changes in the rules for calculating capital gains to exclude the amount of interest claimed as a deduction.
Urban Infrastructure Development Fund
A budget of Rs. 10,000 crores has been set for improving urban infrastructure to influence the economy positively. This investment is expected to increase real estate activity, especially in second and third-tier cities where developers and investors are focusing on building commercial, residential, and retail spaces.
The municipal bodies will also receive support to raise funds, which will ultimately contribute to the industry’s growth.
Infrastructure Finance Secretariat
The newly established Infrastructure Finance Secretariat will assist all stakeholders in attracting more private investment in infrastructure, including railways, roads, urban infrastructure, and power.
Encouragement of Urban Planning Reforms
The government will undertake urban planning reforms to transform their cities into “sustainable cities of tomorrow.” It includes efficient land usage, adequate urban infrastructure, transit-oriented development, and affordable urban land.
Exemptions for Housing Bodies
The finance minister also proposed an exemption to any income from a body or authority established to satisfy the need for housing or urban planning and development.
Non-Resident Indians (NRIs)
The appeal period for the Benami Act has been amended, and the definition of “high court” has been modified to allow for the determination of jurisdiction for non-residents. The Benami Transactions (Prohibition) Act is a 1988 Indian law prohibiting transactions in which a property is held by one person but paid for by another person.
The act aims to tackle using anonymously-held properties for money laundering and tax evasion. The law allows for the seizure of benami properties and imposes heavy fines and imprisonment on violators.
Green Buildings
The government will implement several programs to promote green energy, mobility, and buildings. It will reduce the carbon footprint of the economy and provide job opportunities.
REITs/InvITs
The Finance Minister has suggested taxing the income distributed by Business Trusts (REITs/InvITs) to their unit holders. This income, other than dividends, interests, or rents, is not taxed by the unit holder or the business trust.
The New Tax Slab
The government has increased the tax break limit From 5 lakhs to 7 Lakhs in the new tax laws, which may encourage people to invest in affordable options.
International Finance Tec-City
The International Financial Services Centers Authority (IFSCA) will have the authority to prevent duplicate registration, ultimately affecting the real estate industry.
Major Takeaways
- Increased budget for PM Awas Yojana by 66%.
- Tax exemptions capped at ten crores for capital gains on residential property investment.
- Changes in capital gains calculation rules.
- Budget of Rs. 10,000 crores for improving urban infrastructure.
- Establishment of Infrastructure Finance Secretariat.
- Encouragement of urban planning reforms.
- Exemptions for housing bodies, amendments for Benami Act for NRIs, and promotion of green buildings.
Conclusion
The Budget 2023-24 will positively impact the real estate industry with increased investment in housing schemes and urban infrastructure development. Changes in capital gains calculation, tax exemptions, and urban planning reforms will also boost the real estate sector.
The government’s push towards green buildings and digitalization will benefit the industry and the economy. It’s an exciting time for the real estate industry, with many opportunities for growth and progress.