The Post Pandemic Budget For The Real Estate Industry
The Union Budget 2021 presented by our Finance Minister Nirmala Sitharaman on February 1 has been the talk of the town. On account of the pandemic, the focal points of the budget were health, wellness, infrastructure, and overall administration. There have been vital investments in major sectors which will ensure the development of the nation. In sync with the Make In India initiative, the budget 2021 is rightly focused on boosting the local manufacturing industries. Apart from the manufacturing sector, there has also been an emphasis on encouraging and supporting young entrepreneurs and small and middle sized startups and businesses.
As for the real estate industry, I feel there are some gains that the sector will benefit from, however, in consequence of the pandemic, the sector deserved some more attention.
The demand for residential projects increased during the pandemic, and hence the budget 2021 focused on “Housing for All’. Along these lines, our FM extended the eligibility of the additional 1.5 lakh deduction that was available on loans taken to purchase an affordable house. This extension has been made till March 2022 in order to increase the sales. As for the migrant workers, there has been a tax exemption for notified Affordable Rental Housing Projects. Further, there have been amendments in order to promote foreign investments in India by enabling deductions of tax on dividend income at a lower treaty rate.
The budget 2021 has also laid importance on infrastructure, wherein along with RRTS, metros are unders construction. The centre will be providing funding to major metro projects based in Kochi, Chennai, Bengaluru, and Nagpur. In order to establish a professionally managed Development Financial institution, the budget provided a sum of Rs. 20,000 Cr. to capitalise this institution.
There have been some policies and strategies for the sector that will be beneficial, however, there were some necessary demands that were not addressed by the budget. One of them being single-window clearance that would ensure smooth functioning. Unfortunately, the real estate industry was hit badly by the pandemic, and there were limited actions taken by the government to improve the situation.