Real Estate sector has been helding high expections from Budget 2023,after a pandemic hit market,2022 spurred new growth and the real estate market recorded new highs in 2022.Will the budget 2023 continue the growth ? Here are key take aways from Budget 2023
The real estate sector returned nearly empty-handed from the Union budget as its pleas to increase tax exemption on home loan interest component ,long term capital gains from sale of property was largely ignored and long waiting industry status.
While the sector took heart from the increased allocation in capital expenditure and focus on infrastructure creation which are likely to have a rub on effect on the housing demand, there was no specific announcement for the real estate industry.
Pradhan Mantri Awas Yojana (PMAY):Pradhan Mantri Awas Yojana (PMAY): The outlay for PMAY has been enhanced by 66 per cent to over Rs 79,000 crore.
FM proposed to tax distributed income by business trusts in the hands of a unit holder (other than dividend, interest or rent which is already taxable) on which tax is currently avoided both in the hands of unit holder as well as in the hands of business trust.
Finance minister said, we are implementing many programmes for green fuel, green energy, green farming, green mobility, green buildings, and green equipment, and policies for efficient use of energy across various economic sectors. These green growth efforts help in reducing carbon intensity of the economy and provides for large-scale green job opportunities.
Exemption to development authorities
It is proposed to provide exemption to any income arising to a body or authority or board or trust or commission, (not being a company) which has been established or constituted by or under a Central or State Act with the purposes of satisfying the need for housing or for planning, development or improvement of cities, towns and villages or for regulating any activity or matter, irrespective of whether it is carrying out commercial activity.
Making cities ready for municipal bonds
Through property tax governance reforms and ring-fencing user charges on urban infrastructure, cities will be incentivized to improve their credit worthiness for municipal bonds.
Sustainable cities of tomorrow
States and cities will be encouraged to undertake urban planning reforms and actions to transform our cities into ‘sustainable cities of tomorrow’. This means efficient use of land resources, adequate resources for urban infrastructure, transit-oriented development, enhanced availability and affordability of urban land, and opportunities for all.
Enhancing opportunities for private investment in Infrastructure
The newly established Infrastructure Finance Secretariat will assist all stakeholders for more private investment in infrastructure, including railways, roads, urban infrastructure and power, which are predominantly dependent on public resources.
Urban Infrastructure Development Fund
Like the RIDF, an Urban Infrastructure Development Fund (UIDF) will be established through use of priority sector lending shortfall. This will be managed by the National Housing Bank, and will be used by public agencies to create urban infrastructure in Tier 2 and Tier 3 cities. States will be encouraged to leverage resources from the grants of the 15th Finance Commission, as well as existing schemes, to adopt appropriate user charges while accessing the UIDF. We expect to make available Rs 10,000 crore per annum for this purpose.
A higher limit of Rs 3 crore for tax deducted at source (TDS) on cash withdrawal is being provided to co-operative societies.
The 2023 Budget, in a pre-election year, sought to build on the roadmap laid down by previous budgets, focusing on inclusive development, fostering growth and job creation while keeping the macro-economy in a stable yet growth-oriented mode.The increase in allocation for PMAY by a significant 66% would help continue capital flow under CLSS and other related schemes. Addressing the need for creating sustainable cities of tomorrow through urban planning, ease of land availability and promoting TOD schemes will be key towards sustainable development moving forward. Focus on overall infrastructure development and on Tier 2 and 3 cities will be key to overall economic development. The Budget is a balanced one for the economy while missing out on key real estate sector demands