Budget 2021: Here’s what the real estate sector is expecting

A long-standing demand of the real estate sector is that it must be given the status of an 'industry'. This demand will help developers raise funds at lower costs.

The real estate sector, which suffered due to the coronavirus pandemic, awaits the Union Budget that will be presented on February 1 by the government. Ahead of the budget, the sector has been demanding an easing of regulatory norms and steps that will help in the completion of pending projects and sale of build-up houses. The sector also faces the challenge posed by the migration of labourers from cities after the nationwide lockdown was imposed.

Developers are hoping for Goods and Services Tax (GST) reforms under 2021’s budget. (HT Photo)

Navin Raheja, the chairperson of Raheja Developers, said the real estate sector is the driver of the economy and a boost to the sector will have a trickle-down impact. "People on average invest their one-third of their savings in real estate. The real estate sector is largely suffering due to over-regulation and incomplete projects that have led to delays and defaults. Though the government has put the system online, developers still need to approach 50 departments for approvals. This needs to be taken care of. There should be restructuring of the past loans to complete the projects," he told news agency ANI.

Here’s what the real estate sector is expecting from Budget 2021:

1. Developers are hoping for Goods and Services Tax (GST) reforms under 2021’s budget. The industry’s demand has been to allow GST to be paid on input materials during the construction phase as opposed to the current system in which GST is paid on rent and other income from the property upon completion.

2. A long-standing demand of the real estate sector is that it must be given the status of an 'industry'. This demand will help developers raise funds at lower costs.

3. The real estate sector is also hoping for some GST reforms in the budget. Industry experts want the budget to bring back Input Tax Credit (ITC) which will help in bringing down the cost of construction, thus reducing the property prices. The sector also expects a GST waiver for under-construction properties in the housing sector.

4. The real estate sector is also hoping for the reduction of stamp duty on property purchases. In 2020, Maharashtra reduced the stamp duty on property purchases. The decision led to higher sales in Mumbai and Pune region during the last four months of 2020.

5. The real estate sector is also expecting more infrastructural finds as a liquidity crunch is being faced by the sector which has resulted in delays in project delivery, higher project costs and inflated property prices.

6. The sector is also hoping for single-window clearance in the budget so that the implementation of the projects can be faster.