Budget 2024 Realty Sector - Hoping on GST Reduction and Affordable Housing Revamp


New Delhi: Interim Budget for the FY 24-25 will be presented in the Parliament by Finance Minister Nirmala Sitharaman on February 1. Before the budget there are a lot of speculations on what all the budget will have in store for the Real Estate Segment.

Since it is an election year, the government is expected to try to lure voters with the budget. In the 2014 elections, the BJP government focused on enhancing infrastructure. Furthermore, the Pradhan Mantri Awas Yojana fulfilled the dreams of various homebuyers in buying homes. This year, the real estate sector is also hoping to hear some impactful announcements.

Let’s take a look at what possible announcements could be made by the Finance Minister.

Hope for a Reduction in GST

It is expected that the Finance Ministry may bring a reduction in GST. A decrease in GST on products like cement, ceramics, steel or brass would impact the real estate sector.

Due to increased prices of products like clay or fly ash bricks, the construction cost also increases, leading to a surge in property prices. Either a discount on such products or a reduction in GST may reduce the property prices.

Also Read: Over 2 crore houses to be constructed under PMAY-G in next 5 years

Revitalising Affordable Housing

The government can play a crucial role in realising the dream of a roof over every person’s head by revitalising affordable housing.

For instance, extending the tenure of Pradhan Mantri Awas Yojana (PMAY). Or extending the interest subvention scheme to cover total housing cost of up to Rs 35 lakh, up from Rs 25 lakh presently.

Budget 2024

Single Window Clearance

A single window clearance system will allow builders to save time in successfully handling all types of paperwork. This will help fast-track project development and also reduce uncertainties around approvals.

Builders have been demanding a single window clearance system for the past two and a half decades.

Also Read: Govt sets out key infrastructure plans, increases capex outlay in Budget 2024

Tax Benefits on Home Loans

Real estate developers are expecting to have an increase in the deduction of principal repayment of home loans and a reduction in long-term capital gains tax.

In the FY 23-24 Budget, the Finance Ministry helped homebuyers by deducting the interest on home loans. It said, that homebuyers can take a home loan with the sole purpose of constructing or purchasing a house. Furthermore, they could claim a deduction under the interest category of up to Rs 2 lakh under Section 24.

Since the Rs 2 lakh deduction scheme was introduced several years ago, the average price of 2 to 3 BHK houses then ranged from Rs 20 to 45 lakh. However, in today’s times, the cost of 2 BHK starts from Rs 40 to 45 lakh. There’s a demand to increase the deduction rate to Rs 5 lakh rupees. If this happens, there’ll be a boost in disposable income. That is the amount of money an individual or household has to spend or save after deducting income taxes.

Real Estate Sector - Industry Status

The real estate sector is a significant contributor to employment opportunities and has long been advocated by organizations like CREDAI to be recognized as an industry. 

Granting industry status to the real estate market could provide developers and builders with access to loans at more affordable interest rates and improved terms. Consequently, this change may prompt builders to initiate projects promptly upon receiving booking payments from customers and investors.

Therefore, it can be inferred that the real estate segment holds considerable expectations for the Interim Budget FY 24-25. If the ministry addresses the aforementioned points, it could promote sustainable growth and advance the vision of 'Housing for All'.

Also Read: DDA projects worth Rs 45,000 cr nearing completion