The Union Budget 2021 as introduced by our Finance minister Mrs. Nirmala Sitharaman on 01st February 2021 was quite an effective budget in terms of ‘Affordable Housing’ & ‘Housing for all’ for the substantial portion of the population.
The budget was presented in light of the needful covid-19 impacted situation in which every section of the society was badly hit by the Pandemic situation against which the Government of India rightly supported the Real Estate sector through this Union Budget 2021 with some misses and hits in the said budget.
The Government has taken the ‘Housing for all’ agenda into its priority section and introduced various supportive actions to help the left-out population to own a house of their own.
As introduced in July, 2019 Budget to provide additional deduction of interest of â‚¹ 1.50 lacs, in purchasing a house from the affordable house scheme, the Finance Minister has extended this incentive till 31st March 2022 which means that any person who is purchasing a house from an affordable housing scheme can continue to avail benefit of additional deduction of interest of â‚¹ 1.50 lacs on any additional loan taken before 31/03/2022. This extension shall benefit many people who have yet not purchased their homes and may think to invest their funds to avail this benefit.
Further, on part of the Real Estate Developer, the Government also extended the Tax holiday benefit for an additional 01 year i.e., till 31/03/2022. This move will help the Real Estate developers, especially who are into the affordable housing projects, to avail tax holiday up to 31/03/2022.
Keeping in view the benefit to be passed on both sides i.e., the Allottee and the Real Estate Developer, the benefit of Tax holiday as well as additional interest have been introduced to keep the demand of Affordable housing projects at a good pace.
Also, to promote the supply of affordable rental housing for migrant workers, the Finance Minister proposed tax exemption for ‘Affordable Rental Housing Projects’. This will support in a long way in boosting the real estate market and will ease a lot of pressure in the rental home market projects further helping the migrant workers to a great extent who are living in the un-organized areas.
On the investment front, to boost infusion of funds, the Government has introduced exemption from TDS on the dividend payments of the investors investing under the Real Estate Infrastructure Trusts (REIT’s) and Infrastructure Investment Trusts (InVIT’s) which will act as a stimulus to increase investment in REIT’s and InVIT’s.
The government introduced such a change so that the burden of infusion of high value funds required in the development of infrastructure of India is met by these initiatives. This year’s budget gave the highest ever allocation to NHAI which was â‚¹1,18,101 crores to be infused in a phased manner so that the highway connectivity across the country is built and developed.
The Government also introduced ‘Metroneo’ and Metrolite’ metro technologies which will be available to the sections of Tier-2 cities and adjoining Tier-1 cities at a much lesser cost which best standard of travel and safety.
Under the regulatory mechanism of Real Estate Regulatory Act, 2016 and other rules made thereunder, the registrations, approvals and compliance mechanism under the Realty sector is very complex and still involves many face to face interaction which causes delays in the completion of projects. Under the Budget 2021, there was no initiative introduced for Single window clearance for the Real Estate sector which was being expected by the Real estate developers.
The long-requested Input Tax Credit benefit under the GST mechanism was not commented upon in the Union Budget 2021.
The Pandemic situation gave a serious blow to the Real Estate Developers in addition to the increasing litigation with respect to delayed possession and refunds, for which the Government could have introduced immediate short term liquidity financing, to control and curb the unusual situation.
As a whole, the Government has taken the right steps in the right direction to support and upbring the Realty sector from the shackles of COVID-19 and the aftermath of the Pandemic situation which will bring the Real Estate Sector in the forefront and this time be beneficial for both Developers as well as the Homebuyers.