Commercial real estate and the affordable housing scheme within the residential real estate are thriving the most in Indian real estate at present. The industry is keen to know what more the current government will offer in its second term. Out of the complete list of expectations, some were surely addressed by the government in the latest Union Budget, 2020-21 announced on February 1. Finance Minister (FM), Nirmala Sitharaman has announced some progressive steps planned for the sector:
1. Infrastructure development plan - The government announces infrastructure investment of ₹ 100 Lacs consisting of over 6500 projects for the next five years. Some of the sectors prioritised for investment include housing, safe drinking water, healthcare for all, world-class educational institutes, modern railway stations, airports, bus terminals, metro and railway transportation, and logistics and warehousing.
2. Real estate transactions and tax rate for co-operatives to get concessions - An initiative is introduced to bring relief in real estate transactions. The difference in consideration value of 5 percent by less than the circle rate is considered as income in the hands of purchaser and seller. Nirmala Sitharaman has proposed this limit to increase from 5% to 10%. Co-operative societies, on the other hand, are currently taxed at a rate of 30% along with surcharge and cess, which the FM has now proposed to present an option to be taxed at 22% plus 10% surcharge and 4% cess.
3. Additional benefits on affordable houses - The goal of providing ‘Housing for All’ by March 2022 is drawing closer. The government so far has been successful in delivering a huge bulk of houses to the citizens, resulting in 'Affordable Housing Initiative' as the best performing segment in residential real estate.
To accelerate the implementation of this housing scheme, Sitharaman announced an additional deduction of up to ₹ 1, 50, 000 for interest paid on loans. The home buyers under this scheme will further benefit as the date of loan sanction for availing this additional deduction has been extended by one more year, which till now was on or before 31st March 2020.
4. Emphasis on green and environmentally friendly projects - An increased level of awareness is found in the population of India, especially the urban residents, to lead a healthy lifestyle. Hence, the environmentally friendly locations, projects, and the green concept have picked up the pace in recent times. With a joint effort by the government and real estate industry experts, the Indian green building market alone is set to increase by 10 billion sq ft by the year 2022.