Expectations from the Union Budget 2018 for real estate sector

With the implementation of RERA and other reforms and policies in 2017, developers, buyers and investors in the real estate sector had some expectations from Union Budget 2018 which would help in reviving the sector.

A number of buyers and investors stated that while the Government offers subsidies for properties below Rs. 50 lakhs, currently there are no subsidies for homes which are valued higher.

In affordable housing, PMAY is a great initiative for individuals earning an annual income less than Rs.19 lakhs. A number of buyers stated that if this income bracket was increased to include other income groups it would be helpful. A number of home buyers stated that Tax-exemptions for first-time homebuyers should be a part of Union Budget 2018. If the government increased the limit on subsidies to properties above Rs.50 lakhs, the real estate sector would see higher investments.

Home buyers are also hoping for an increase in income tax slabs. They were also looking at extra incentive for home loan principal repayment. Currently, the home loan repayment is included under section 80C of the Income Tax Act. Buyers were also hoping for the inclusion of interest paid on borrowed capital for under-construction properties as well as an increase in standard deduction on rental income. Currently, a 100% deduction on home loan interest for rented houses is there, while owner-occupied homes are eligible for only Rs 2 lakh deduction.

Developers which were impacted by RERA, expects that there would be a single window of clearance for projects. The developers have to adhere to timelines for completing projects and would be penalised if the projects get delayed. They were hoping that the government will make it easier to get various clearances so the timely delivery of projects is done. The implementation of RERA has brought back investor confidence in the real estate sector. Developers are hoping for an extension of the sunset clause for SEZ, reduction of GST, as well as incentives for affordable housing segment from the Union Budget 2018.