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The residential sector is experiencing a boom amid the crisis of the coronavirus pandemic. Residential sales in the top 8 cities are back to pre-coronavirus levels. The real estate sector expects strong demand in 2022, and the Union Budget for 2022 is expected to play an important role in this. The industry expects some relaxation in taxes and the exemption or reduction of the GST on raw materials to boost the real estate sector.
State of the real estate industry
Dr. Atul Goyal of NAREDCO Pune says that the real estate sector is expecting some tax breaks such as an increase in the exemption under section 24 to 2 lakhs. Profit margins are already low due to the pandemic and developers will also have to make up for lost time. Demand for a single window authorization mechanism has been around for many years. Furthermore, this is an opportune time to grant industry status to the real estate sector so that it can avail itself of affordable credit facilities from financial institutions.
Also, GST exemptions for properties under construction and incentives for private investment in the affordable housing sector would be nice. Goyal says that easing liquidity and a tax holiday in the near term could bode well for the recovery in the real estate sector. Nakul Mathur, MD, Avantha India says, “In the new budget, we will request the finance minister to reduce TDS rates on coworking. It would be better if the finance minister considers bringing coworking spaces to 2% TDS. This will help a lot in managing cash flow in the coworking space.”
GST exemption on raw materials such as cement, steel, etc.
The real estate sector is one of the main pillars of the Indian economy, contributing around 8% to the GDP. Siddharth Maurya, a specialist in real estate resources and fund management, says the government should recognize the important role the sector plays and undertake intensive policy reforms to accelerate the growth in demand for real estate. Currently, the income tax exemption can be used up to Rs 2 lakh paid as interest on a home loan. This needs to be reviewed and expanded to create healthy demand in this sector. Similarly, a GST exemption or reduction should be offered on raw materials such as cement, steel, etc. Commodity prices are rising and a reduction in GST rates can bring a lot of relief to the developer. The granting of infrastructure status to the sector is also pending, this may help in the liquidity of the sector.