Key Gains for Real Estate Industry from Union Budget 2024-25
Jul 24 2024
**New Delhi:** Nirmala Sitharaman, the Minister of Finance, presented the Union Budget 2024-2025 in Lok Sabha on July 23, 2024. Presenting her seventh straight budget, Sitharaman highlighted that India’s inflation continues to be low, stable, and moving towards the 4 percent target, with core inflation (non-food, non-fuel) currently at 3.1 percent. The budget focuses on nine priorities to generate ample opportunities: productivity and resilience in agriculture, employment and skilling, inclusive human resource development and social justice, manufacturing and services, urban development, energy security, infrastructure, innovation, research and development, and next-generation reforms.
**Real Estate Industry Gains from Union Budget 2024-25:**
**Pradhan Mantri Awas Yojana (PMAY):** Three crore additional houses under PMAY have been announced, with necessary allocations made. PM Awas Yojana Urban 2.0 will address the housing needs of 1 crore urban poor and middle-class families with an investment of ?10 lakh crore, including ?2.2 lakh crore central assistance over the next five years. A provision for interest subsidy to facilitate affordable loans is also envisaged.
**Transit-Oriented Development:** Plans for 14 large cities with a population above 30 lakh will be formulated, including implementation and financing strategies.
**Rental Housing:** Policies and regulations for efficient and transparent rental housing markets with enhanced availability will be put in place. Rental housing with dormitory-type accommodation for industrial workers will be facilitated in PPP mode with VGF support and commitment from anchor industries.
**Stamp Duty:** The center will encourage states to moderate high stamp duty rates and consider further lowering duties for properties purchased by women, making this reform an essential component of urban development schemes.
**Land-Related Reforms by State Governments:** Reforms will cover land administration, planning, and management in both rural and urban areas, incentivized for completion within the next three years through appropriate fiscal support.
**Rural Land-Related Actions:** These include assigning Unique Land Parcel Identification Numbers (ULPIN) or Bhu-Aadhaar for all lands, digitizing cadastral maps, surveying map sub-divisions as per current ownership, establishing land registries, and linking to the farmers' registry to facilitate credit flow and agricultural services.
**Urban Land-Related Actions:** Land records in urban areas will be digitized with GIS mapping. An IT-based system for property record administration, updating, and tax administration will be established to improve the financial position of urban local bodies.
**Cities as Growth Hubs:** The government will work with states to facilitate the development of 'Cities as Growth Hubs' through economic and transit planning and orderly development of peri-urban areas utilizing town planning schemes.
**Creative Redevelopment of Cities:** A framework for creative brownfield redevelopment of existing cities with transformative impact will be formulated, enabling policies, market-based mechanisms, and regulation.
**Long-Term Capital Gains:** Long-term gains on all financial and non-financial assets will attract a tax rate of 12.5 percent. The exemption limit for capital gains on certain financial assets has been increased to ?1.25 lakh per year to benefit the lower and middle-income classes.
**Andhra Pradesh Capital:** The central government will facilitate special financial support through multilateral development agencies to fulfill the commitments in the Andhra Pradesh Reorganization Act, with ?15,000 crore arranged for the current financial year and additional amounts in future years.
**National Company Law Tribunals:** The IBC has resolved over 1,000 companies, resulting in direct recovery of over ?3.3 lakh crore to creditors, with 28,000 cases involving over ?10 lakh crore disposed of prior to admission. Changes to the IBC and strengthening of tribunals will be initiated to speed up insolvency resolution, with additional tribunals established to decide cases exclusively under the Companies Act.
**PM Surya Ghar Muft Bijli Yojana:** Launched to install rooftop solar plants, enabling 1 crore households to obtain free electricity up to 300 units per month, with over 1.28 crore registrations and 14 lakh applications received.
**Industrial Parks:** The government will facilitate the development of investment-ready “plug and play” industrial parks with complete infrastructure in or near 100 cities, in partnership with states and the private sector, by better using town planning schemes. Twelve industrial parks under the National Industrial Corridor Development Programme will also be sanctioned.
**Industry Reactions to Budget 2024-25:**
- **Aravind Maiya, CEO, Embassy REIT:** Reducing the holding period for long-term capital gains from 36 to 12 months aligns with listed equity shares, enhancing the attractiveness of the REIT product and increasing investor participation. - **Murali Malayappan, Chairman & MD, Shriram Properties:** The digitization of India’s land documentation system is a game-changer, facilitating property transactions, reducing disputes, and encouraging investment, though issues like GST rationalization and industry status remain unaddressed. - **Venkatesh Gopalakrishnan, MD & CEO, Shapoorji Pallonji Real Estate:** The increase in the affordable housing deduction for interest paid on loans is a positive change, providing relief to homebuyers and boosting the real estate market. - **Ashwin Sheth, Chairman & MD, Ashwin Sheth Group:** The focus on efficient urban planning, including transit-oriented development and enhanced infrastructure for water supply, sewage, and waste management, will elevate the quality of urban living. - **Manas Mehrotra, Founder, 315Work Avenue:** The budget could have better addressed the coworking sector by lowering GST rates for small-scale clients and establishing a single-window clearance system. - **G Hari Babu, National President, NAREDCO:** The development of industrial parks in 100 cities under the Industrial Corridor initiative will create new real estate opportunities, potentially leading to the growth of commercial and residential properties. - **Anshul Jain, Chief Executive - India, SE Asia & APAC Tenant Representation, Cushman & Wakefield:** The abolition of angel tax and reduction of corporate tax on foreign companies are encouraging for start-ups and GCCs, driving commercial real estate demand. - **Pradeep Misra, Chairman & MD, Rudrabhishek Enterprises:** The development of TOD in 14 large cities and digitization of land records with GIS mapping will increase transparency and provide better administrative services. - **Anurag Mathur, CEO, Savills India:** The budget’s attention to urban and rural development, rental housing for industrial workers, and TODs will positively impact the real estate sector. - **Pavitra Shankar, Managing Director, Brigade Enterprises:** The budget has not addressed key demands such as granting industry status, input tax credit, and reduction of GST. The marginal increase in individual income tax savings is also a concern. - **Niranjan Hiranandani, Chairman, Hiranandani Group:** The digitization of land records, urban housing for the middle class, and workforce skilling will have a profound impact on the real estate sector, currently experiencing double-digit growth. - **Anuj Puri, Chairman, ANAROCK Group:** The mega allocation for the Hyderabad-Bengaluru industrial corridor and Vizag-Chennai corridor will boost growth and real estate development in these areas. - **Prashant Sharma, President, NAREDCO Maharashtra:** The budget’s approach to job creation and boosting consumption is positive for the real estate sector. - **Amar Mysore, President, CREDAI-Bengaluru:** The budget falls short of addressing core challenges such as industry status, GST relief, and streamlined approvals. - **Domnic Romell, President, CREDAI-MCHI:** The focus on TOD for 14 large cities will improve connectivity, reduce congestion, and enhance the livability and attractiveness of urban areas. - **Pradeep Aggarwal, Founder & Chairman, Signature Global (India):** The budget’s infrastructure impetus will create a multiplier effect and boost the overall housing sector. - **Gautam Shahi, Director, CRISIL Ratings:** The reduction in the long-term capital gains tax rate to 12.5% is positive, but the removal of indexation will increase the tax incidence on property sales, especially for older properties. - **Mehul Bheda, Partner, Dhruva Advisors:** The new tax treatment of buy-backs and broader tax impact on investments in non-financial assets balance positive reforms with drawbacks such as removing inflation-linked indexation. - **Anupama Reddy, VP & Co-Group Head, Corporate Ratings, ICRA:** The removal of indexation benefit will result in a higher tax burden on real estate transactions, despite the reduced LTCG tax rate. - **Neeraj Akhoury, President, Cement Manufacturers’ Association:** The ?11 lakh crore capital expenditure allocation signifies the government’s commitment to modernizing infrastructure, driving demand for building materials. - **Parth Jindal, VP, Cement Manufacturers’ Association:** The allocation for education, employment, and skilling initiatives will create a skilled workforce for the cement industry. - **Ramesh Nair, CEO, Mindspace Business Parks REIT:** The reduction of the holding period for long-term capital assets from 36 to 12 months improves liquidity in REITs and is a welcome change. - **Amit Sinha, MD & CEO, Mahindra Lifespace Developers:** Encouraging states to reduce high stamp duties for women promotes inclusive homeownership. - **Rajeev Vidhani, Partner, Khaitan & Co:** The removal of the indexation benefit for LTCG tax on real estate, despite the reduced tax rate, could lead to a higher tax burden on transactions. - **Dhruv Agarwala, Group CEO, Housing:** The budget’s focus on affordable housing and improved accessibility represents a significant change for the real estate sector. - **Dhaval Ajmera, Director,
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