Union Budget 2023-24 : GST rate cut, sops for affordable houses

With the upcoming Union Budget 2023-24, expectations run high among real estate developers. They look forward to a slew of measures that ensure a thriving recovery of the real estate sector and boost economic growth. But are there any new additions to the list of expectations, or recurring demands have resurfaced again? Explore the wish list here!

The Indian economy has shown resilience in the face of COVID-19 by regaining normalcy post-pandemic. To bolster this trend, the upcoming Union Budget 2023-24 is expected to play a big role. Homebuyers and developers hope to gain tax benefits in order to spur savings and investments. In addition, a host of effective policies and reforms will help revive and maintain the long-term growth of the real estate sector. (informations only.com)

What are the major expectations?

Increase in the bracket for affordable housing

Ramesh Nair, CEO (India) and Managing Director (Market Development, Asia), Colliers India, avers that extension of the cost bracket for affordable and mid-income housing and expansion of tax benefits for first-time buyers will boost the demand in the housing sector. In addition, providing incentives to developers of affordable housing projects and giving an industry status to real estate will be a big boost.

The realty sector expects Union Budget 2023-24 to provide the impetus that widens the housing market opportunities. (informations only.com)

Relief in various deductions

Realtors are also looking at credit availability for under-construction projects that will help expedite development, free up capital and provide liquidity to the sector. Tax benefits and exemptions for buyers, circle rates, and stamp duty would be effective measures Government can take to bring in more investment in real estate. Revised income tax slabs will reduce overall tax expenditure. Expanding the availability of income tax deductions for homebuyers can incentivise new buyers. For developers, there is anticipation for the availability of input tax credits and reductions in stamp duty and registration costs, which can significantly reduce the overall cost of the project. The Government should also rationalise GST rates for building materials, including steel, cement and tiles. Reduction in GST rates and stamp duty will encourage moderation in the pricing of housing units and apartments. It will give real estate a breather from the increasing cost valuation of projects.

Tax benefits for co-working and shared spaces

Driven by a hybrid work culture, several companies are now opting for co-working spaces. The concept of shared spaces has seen an exponential boost in recent years. Along with small businesses and freelancers, major corporates also lease co-working spaces. It is further expected to grow by 10-13 percent by 2025. However, the GST on membership in any co-working office/ managed office is 18 percent. Most of the entrepreneurs who are adopting working in co-working spaces are new in the business. This turns out to make a significant impact on their cash flow as an 18 percent GST is huge for any of the start-ups and new entrepreneurs. Therefore, providing special funding to them under the budget of 2023 will lead to the expansion of the co-working/managed offices industry.

Keeping in mind the rising costs of raw materials and increased lending rates, cutting back taxes is the need of the hour. Tax sops will definitely help developers and homebuyers, giving an overall push to the real estate sector. (informations only.com)

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