The COVID19 pandemic was rough on a majority of businesses. And realty sector along with all its stakeholders took a massive hit last year. However, the Union Budget 2021 for the real estate sector has alleviated the situation and brought some good news for those looking to buy a new home this year!
Finance Minister, Nirmala Sitharaman while presenting the Union Budget 2021-2022 said that the government sees affordable housing as a priority. Since real estate is the second biggest creator of jobs in India, Real Estate sector welcomed Budget 2021 with a push in investments.
Two significant incentives given to the real estate sector are tax benefits for affordable housing and private investment formats such as REITs and InvITs (Real Estate Investment Trusts and Infrastructure Investment Trusts).
Here is what the Real Estate sector expects from Budget 2021?
REITs (Real Estate Investment Trusts)
REITs are companies that own and operates real estates to generate income. These investments offer the investors the profits of real estate and the easy gain of financing in the stock that is traded publically. REITs are traded publically, so they are highly liquid. Investors, while investing in REITs invest in real estate properties like- hotels, offices, retail centres, apartments, etc.
Affordable Housing
This housing segment will create demand from homebuyers, increasing the developers’ supply of projects. Many developers are expected to launch more affordable housing projects in 2021. Union Budget 2021 for real estate has provided the additional income tax deduction of ₹ 1.5 lakh for home loans to purchase affordable housing. The eligibility for this tax dedication has been extended by one year, i.e. till March 31st, 2022.
Tax Exemption
Under Section 24 of the Income Tax Act, tax exemption of up to ₹ 2 lakh is provided on home loan interest rates. With this announcement, the new homeowners will get a total exemption of ₹ 3.5 lakh ( 2+ 1.5) until March 31, 2022.
Infrastructure
Metro and RRTS are under construction in 27 cities. Two new technologies, MetroLite and MetroNeo, will be adopted to offer the metro system at a much lesser cost with same suitability and safety. The Financial Minister said, ‘The government is going to spend big on infrastructure.’
Benefit for Construction Workers
Support lend to migrant workers & labourers will boost the real estate sector. In her speech, the finance minister also said that- the social security aids will now be extended to construction workers and minimum wages will apply to all categories. The compliance burden on employers will be reduced. The FM also said that, “women will be allowed to work in all categories and also in night-shifts, with adequate protection.”
With 2020, the dreadful year officially ending, every citizen has high hopes from 2021- a year filled with progress and fortune. The real estate sector is among those sectors that bounced back pretty good after the lockdown was lifted. The Budget 2021 for the Real Estate Sector was expecting more, but many scholars studied and termed it a realistic budget.
