Govt of India has recently announced Union Budget 2023-24 on Feb 1st, 23. It is receiving mixed responses from the real estate industry. The GOI has forecasted economic growth at 7 % for FY 2023-24. The capital expenditure on infrastructure development has been increased in Union Budget 2023-24 with a planned capital expenditure of Rs 10 lakh crore. This is a welcome move as this will help the country take a tremendous leap to achieve the milestone of India becoming a USD five trillion economy and a global powerhouse.
Finance Minister Nirmala Sitharaman has announced several measures that are likely to have a positive bearing on the real estate sector.
Key takeaways for Real Estate Industry from Union Budget 2023-24
- The increase in allocation for Pradhan Mantri Awas Yojna (PMAY) by a significant 66% (79000 Cr) would help continue capital flow under CLSS and other related schemes. This will boost affordable housing across India.
- The finance minister proposed to amend provisions for computing capital gain in case of joint development of the property to include the amount received by the cheque into consideration.
- While interest paid on borrowed capital for acquiring or improving a property can, subject to certain conditions, be claimed as a deduction from income, it can also be included in the cost of acquisition or improvement on transfer, thereby reducing capital gains. It is proposed to provide that the cost of acquisition or improvement shall not include the amount of interest claimed earlier as a deduction.
- It is proposed to provide a time limit for an SEZ unit to bring the proceeds from exports of goods or services into India. The filing of an income-tax return is also proposed to be made mandatory for claiming a deduction on export income.
- The newly established Infrastructure Finance Secretariat will assist all stakeholders with more private investment in infrastructure, including railways, roads, urban infrastructure, and power, which are predominantly dependent on public resources.
- The GOI of India has proposed property tax reforms to raise incentives for cities to improve their credit ratings for municipal bonds. These bonds can help alleviate urban infrastructure like Road Networks, Bridges and improve real estate sentiment in these areas.
- The upgradation of 50 airports and ports has been announced thus boosting the real estate industry in that particular city.
- In this budget, GOI has emphasized on the development and urban planning of Tier 2 and Tier 3 cities. With sustainable and planned development in focus, the real estate market can boost in these locations. 10,000 Cr of funds has been proposed for this scheme.